corporates...and strong distribution network. cmpc is also the largest producer of packaging paper,...
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Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 1
Empresas CMPC S.A.
Rating Type Rating Outlook Last Rating Action
Long-Term Local Currency IDR BBB Stable Affirmed 9 August 2018
Long-Term IDR BBB Stable Affirmed 9 August 2018
National Equity Rating Primera Clase Nivel 1(chl)
Affirmed 9 August 2018
Click here for full list of ratings
Financial Summary
(USDth) Dec 2016 Dec 2017 Dec 2018F Dec 2019F
Operating EBITDA (Before Income from Associates) 969,603 1,078,287 1,624,111 1,801,489
Operating EBITDAR Margin (%) 19.9 21.0 28.8 29.9
FFO Margin (%) 11.3 14.9 20.5 21.7
FFO Adjusted Leverage (x) 5.9 4.5 3.0 2.6
Total Net Debt with Equity Credit/Operating EBITDA (x) 3.8 3.4 2.2 1.8
F – Forecast. Source: Fitch Ratings.
On Aug. 9, 2018, Fitch Ratings affirmed the Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) for
Empresas CMPC S.A. at ‘BBB’ and its Long-Term National Scale Rating at ‘AA–(cl)’. The Rating Outlook on the
corporate ratings is Stable.
CMPC’s ratings reflect its strong business positions as the fourth-largest market pulp producer globally and the second-
largest tissue producer in Latin America. In addition, CMPC is able to generate strong cash flow during cyclical pricing
downturns because its production cost is in the lowest quartile. However, Fitch considers the risks associated with the
intrinsic high volatility of the pulp and paper industry in its analysis. The ratings are also supported by CMPC’s significant
forestry investments, consistently solid liquidity position and low refinancing risk.
Inversiones CMPC is a wholly owned subsidiary of CMPC. All of Inversiones CMPC’s debt is unconditionally guaranteed
by CMPC. Its ratings have been linked to those of CMPC through Fitch’s Parent and Subsidiary Rating Linkage Criteria.
Key Rating Drivers
Stable Outlook: The Stable Outlook for the corporate ratings incorporates an expectation that CMPC’s net leverage will
decline to about 2.2x in 2018 and be around 2.0x in 2019. Fitch expects more robust cash generation for 2018 and 2019
due to higher pulp prices. Pulp prices should remain elevated through 2020 due to strong demand from China and a
dearth of new projects, which would benefit the company’s leverage reduction during the next few years.
Solid Pulp Position: CMPC has a strong position in market pulp, as the fourth-largest market pulp producer globally,
with an annual production capacity of hardwood and softwood pulp of 4.1 million tons. Pulp and forest division sales
generated about 73% of 2017 EBITDA, making the company more exposed to the cyclical nature of the pulp segment.
Cash production costs are among the world’s lowest for both hardwood and softwood pulp, ensuring long-term
competitiveness. During first-quarter 2018, the company’s cash cost of production was USD206 per ton for hardwood
pulp and USD336 per ton for softwood, which placed it firmly in the lowest quartile of the cost curve.
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 2
Excellent Regional Tissue Business: CMPC’s ratings also reflect its strong business positions within Latin America.
The company is the second-largest tissue producer in Latin America, with leading positions in Chile, Peru, Argentina and
Uruguay and has a growing presence in Brazil and Mexico. CMPC’s strong market position in tissue, which accounted for
19% of its EBITDA during 2017, is the result of the strong brand equity of its products, its low production-cost structure,
and strong distribution network. CMPC is also the largest producer of packaging paper, boxboard, corrugated boxes and
multiwall bags in Chile. Its paper and paper products divisions accounted for an additional 8% of EBITDA.
Stronger CFFO Expected: Fitch projects that CMPC will generate about USD1.6 billion of EBITDA in 2018, benefiting
from higher pulp prices. This figure compares positively with USD1.5 billion for the LTM ended June 30, 2018. The
company generated USD814 million of cash flow from operations (CFFO) in the LTM ended June 30, 2018, and
incorporates the loss of pulp sales of about 400,000 tons in the second half of 2017, due to the unplanned stoppage of
the Guaiba II mill. Investments of USD480 million and dividends of USD67 million resulted in FCF generation of
USD268 million, after several years of negative FCF. Fitch expects FCF to remain positive, allowing the company to
reduce debt, despite the expected increase in dividend distributions to 40% of net income.
Leverage to Decline: Fitch projects net leverage will decline to about 2.2x in 2018 and to be around 2.0x during 2019.
Better pulp prices and annual investments around USD500 million–USD550 million should contribute to deleveraging. Net
debt/EBITDA fell to 2.3x at June 30, 2018, as per Fitch’s calculations, from 3.4x in 2017 and 3.8x in 2016.
Significant Forestry Investments: A key credit consideration that continues to support CMPC’s investment-grade credit
profile is its ownership of about 1 million hectares of land throughout Chile, Brazil and Argentina, where the company has
developed about 687,000 hectares of forestry assets. The plantations are valued at USD3.5 billion. Importantly, the nearly
ideal conditions for growing trees in the region makes these plantations extremely efficient by global standards, and gives
the company a sustainable advantage in terms of cost of fiber and transportation costs between forest and mills.
Cyclicality of Pulp Prices: The market pulp industry is highly cyclical; prices move sharply in response to changes in
demand or supply. Market fundamentals for pulp producers are favorable, as strong demand from China has helped the
market absorb new capacity from Asia Pulp and Paper and Fibria Celulose S.A. seamlessly. Prices through 2020 should
be healthy due to the lack of new projects, which should help issuers build cash positions for new projects or reduce debt
accumulated during recent pulp mill projects. China will continue to play a key role in supporting prices, and demand
should be driven by a growing economy and the closing of pulp mills that relied on non-wood fibers.
Rating Derivation Relative to Peers
Rating Derivation Versus Peers
Peer Comparison CMPC is the second-largest tissue producer in Latin America and is the fourth-largest market pulp producer globally, after Fibria and Suzano Papel e Celulose S.A., which are in the process of merging operations (BBB‒/Stable), International Paper Company (not rated) and Celulosa Arauco y Constitucion S.A. (Arauco; BBB/Negative). CMPC has annual pulp production capacity of 4.1 million in an industry of 62 million tons of market pulp.
Similar to Latin American pulp producers Arauco, Fibria and Suzano, CMPC’s pulp production cash costs are among the lowest in the world, ensuring its long-term competitiveness. CMPC and Arauco are rated higher than their Brazilian peers, due to more diversified regional and business profiles with operations in the more stable tissue and boards segments, respectively. Fibria and Suzano combined will have a significant scale of operations, but have industrial facilities only in Brazil.
Liquidity is historically strong for pulp producers. The deleveraging process for CMPC, Arauco and Klabin S.A. (BB+/Stable) following the startup of their pulp mills took longer than expected due to soft pulp prices in 2016. Fitch expects a deleveraging trend for CMPC, with stronger cash flow generation supported by better pulp prices and lower investments. Arauco will initiate investments in its MAPA project and leverage is expected to ramp up again during the construction period, with a quick deleveraging after the startup of the mill. Leverage for Suzano and Fibria will increase following the merger and will position the company with higher leverage than CMPC. However, ratings are supported by the expectation that net leverage will decline in the next three years due to strong cash flow generation. CMPC and Arauco’s operating margins are lower than the Brazilian companies, as they operate in lower-margin business segments such as tissue and packaging and boards.
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 3
Parent/Subsidiary Linkage Inversiones CMPC is a wholly owned subsidiary of CMPC and is incorporated in the Cayman Islands as an exempted limited liability company. All of Inversiones CMPC’s debt is unconditionally guaranteed by CMPC. Its ratings have been linked to those of CMPC through Fitch’s Parent and Subsidiary Rating Linkage Criteria.
Country Ceiling No Country Ceiling constraint was in effect for these ratings.
Operating Environment About 53% of CMPC’s sales are to Europe, Asia and the U.S., while 47% is in Latin America, of which about 21% comes from Chile. CMPC’s export-oriented profile mitigates the company’s exposure to demand from Latin America, which makes it vulnerable to macroeconomic conditions in the region. The strong brand equity of CMPC’s tissue products, its low production-cost structure and strong distribution network reduce volatility during market downturns.
Other Factors Not applicable.
Source: Fitch Ratings.
Navigator Peer Comparison
Rating Sensitivities
Developments That May, Individually or Collectively, Lead to Positive Rating Action
A rating upgrade for CMPC is not likely in the near future.
Net leverage below 2.0x through the cycle.
Developments That May, Individually or Collectively, Lead to Negative Rating Action
Net leverage above 3.0x, considering pulp prices are expected to remain relatively unchanged;
Any change in the company’s strategy to reduce leverage and improve its capital structure;
Deterioration in macroeconomic conditions in the countries in which the company has strong tissue businesses.
Liquidity and Debt Structure
Strong Liquidity: As of June 30, 2018, CMPC had USD639 million of cash and marketable securities, and total debt was
USD4.1 billion. CMPC’s liquidity is enhanced by a USD400 million unused revolving committed credit facility. The
company has a manageable debt maturity profile, with USD519 million of debt falling due in the short term, including
factoring transactions as per Fitch’s methodology, and USD640 million from July 2019 to June 2020. As of June 30, 2018,
total debt was composed of senior notes (72% of total debt), loans from Banco Nacional de Desenvolvimento Economico
e Social (BNDES) (10%), working capital lines (11%), and others (7%). In July 2018, CMPC issued local bonds for about
USD330 million (in Chilean UF) that will be used for debt amortization.
During 2017, CMPC also agreed to pay about USD150 million as restitution to consumers for amounts unduly paid in the
Chilean tissue market, as agreed with Chilean authorities. Fitch considered this amount as restricted cash at YE 2017,
and USD158 million was paid by CMPC in June 2018.
IDR/Outlook
BBB/Sta a n bbb+ n bbb+ n bbb n bbb+ n bb+ n bbb n bbb- n bbb+ nBBB/Neg bbb+ n a- n bbb- n bbb+ n bbb+ n bbb- n a- n bb+ n bbb+ nBBB-/Sta bbb- n bbb n bbb n bbb n bbb n bb+ n a- n bb+ n bbb nBBB-/Pos bbb n bbb+ n bbb n bbb n bbb+ n bb- n a- n bb+ n bbb+ nBB+/Sta bb- n bbb+ n bbb- n bbb- n bbb n bb+ n bbb n bb n bbb- nB/RWE bb+ n bb- n bbb n bbb n bb+ n b+ n a- n b- n b+ nB+/Neg a- n bbb n bb+ n bbb- n bb+ n bb- n b+ n b n bb- n
Source: Fitch Importance n Higher n Moderate n Low er
Masisa S.A.
Financial
Structure
Financial
Flexibility
Financial profile
Name
Issuer
Management
and Corporate
Governance
Sector
Competitive
Intensity
Sector
Trend
Company's
Market
Position Diversification Profitability
Operating
Environment
Business profile
Celulosa Arauco y Constitucion S.A.
Suzano Papel e Celulose S.A.
Fibria Celulose S.A.
Klabin S.A.
Eldorado Brasil Celulose S.A.
Empresas CMPC S.A.
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 4
Debt Maturities and Liquidity at YE 2017
Liquidity Summary
(USD 000) 12/31/2016 12/31/2017
Total Cash and Cash Equivalents 595,843 832,754
Short-Term Investments 0 0
Less: Not Readily Available Cash and Cash Equivalents 0 150,000
Fitch-Defined Readily Available Cash and Cash Equivalents 595,843 682,754
Availability Under Committed Lines of Credit 400,000 400,000
Total Liquidity 995,843 1,082,754
LTM EBITDA 969,603 1,078,287
LTM FCF (56,175) 230,967
Source: Fitch Ratings, company filings.
Scheduled Debt Maturities
(USD 000) 12/31/2017
Current Year 537,128
Plus 1 Year 701,611
Plus 2 Years 146,697
Plus 3 Years 144,165
Plus 4 Years 639,126
Thereafter 2,149,491
Total Debt Maturities 4,318,218
Source: Fitch Ratings, company filings.
639
519 640
135 135
578
2,113
400
0
500
1,000
1,500
2,000
2,500
Cash Short-Term Debt 2 Years 3 Years 4 Years 5 Years Beyond 5 Years
(USD Mil.)Revolving Commited Credit Facility
Liquidity and Debt Maturity Schedule(As of June 30, 2018)
Source: Company reports, Fitch Ratings.
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 5
Charts
Tissue37%
Pulp37%
Paper16%
Forest and Wood
Products10%
Net Revenues by Segment(2017)
Source: Company data, Fitch Ratings.
Tissue31%Pulp
45%
Paper15%
Forest and Wood
Products9%
Source: Company data, Fitch Ratings.
Net Revenues by Segment(First-Half 2018)
Tissue19%
Paper8%
Source: Company data, Fitch Ratings.
EBITDA by Segment(2017)
Pulp/Forest and Wood Products
73%
Tissue11%
Paper5%
Source: Company data, Fitch Ratings.
EBITDA by Segment(First-Half 2018)
Pulp/Forest and Wood Products
84%
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 6
Key Assumptions
Fitch’s Key Assumptions Within Our Rating Case for the Issuer
Third-party pulp sales volume between 3.4 million tons and 3.6 million tons during 2018–2020;
Pulp prices between USD675 and USD750 per ton during 2018–2020;
Annual capex around USD500 million–USD550 million between 2018 and 2020;
Dividends of 40% of net income.
Financial Data
(USDth) Historical Forecast
Dec 2015 Dec 2016 Dec 2017 Dec 2018F Dec 2019F Dec 2020F
SUMMARY INCOME STATEMENT
Net Revenue 4,841,141 4,865,737 5,143,074 5,648,950 6,023,350 6,199,700
Revenue Growth (%) 0.1 0.5 5.7 9.8 6.6 2.9
Operating EBITDA (Before Income from Associates)
1,099,007 969,603 1,078,287 1,624,111 1,801,489 1,891,895
Operating EBITDA Margin (%)
22.7 19.9 21.0 28.8 29.9 30.5
Operating EBITDAR 1,099,007 969,603 1,078,287 1,624,111 1,801,489 1,891,895
Operating EBITDAR Margin (%)
22.7 19.9 21.0 28.8 29.9 30.5
Operating EBIT 725,322 531,699 628,987 1,171,326 1,346,202 1,433,179
Operating EBIT Margin (%)
15.0 10.9 12.2 20.7 22.4 23.1
Gross Interest Expense
-187,032 -212,825 -219,485 -214,788 -199,355 -187,588
Pretax Income (Including Associate Income/Loss)
413,869 -35,578 119,111 968,539 1,158,846 1,257,591
SUMMARY BALANCE SHEET
Readily Available Cash and Equivalents
561,369 595,843 682,754 572,742 700,100 958,372
Total Debt with Equity Credit
4,194,493 4,315,034 4,318,218 4,094,454 3,891,479 3,744,782
Total Adjusted Debt with Equity Credit
4,194,493 4,315,034 4,318,218 4,094,454 3,891,479 3,744,782
Net Debt 3,633,124 3,719,191 3,635,464 3,521,712 3,191,379 2,786,410
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 7
SUMMARY CASH FLOW STATEMENT
Operating EBITDA 1,099,007 969,603 1,078,287 1,624,111 1,801,489 1,891,895
Cash Interest Paid -178,752 -190,600 -208,442 -214,788 -199,355 -187,588
Cash Tax -117,121 -174,707 -69,348 -213,079 -254,946 -276,670
Dividends Received Less Dividends Paid to Minorities (Inflow/(Out)flow)
0 0 0 0 0 0
Other Items Before FFO
-79,015 -65,246 -51,210 -50,000 -50,000 -50,000
Funds Flow from Operations
734,535 551,522 764,875 1,158,245 1,309,187 1,389,637
Change in Working Capital
-57,429 -46,739 -43,376 -185,308 -98,295 -46,299
Cash Flow from Operations (Fitch Defined)
677,106 504,783 721,499 972,937 1,210,892 1,343,338
Total Non-Operating/ Nonrecurring Cash Flow
0 0 0
Capex -805,050 -524,636 -485,756
Capital Intensity (Capex/Revenue) (%)
16.6 10.8 9.4
Common Dividends -30,014 -36,322 -4,776
FCF -157,958 -56,175 230,967
Net Acquisitions and Divestitures
5,744 894 1,177
Other Investing and Financing Cash Flow Items
-128,034 56,013 5,136 0 0 0
Net Debt Proceeds -306,422 84,755 -369 -223,764 -202,975 -146,697
Net Equity Proceeds 0 0 0 0 0 0
Total Change in Cash -586,670 85,487 236,911 -110,012 127,357 258,273
ADDITIONAL CASH FLOW MEASURES
FFO Margin (%) 15.2 11.3 14.9 20.5 21.7 22.4
Calculations for Forecast Publication
Capex, Dividends, Acquisitions and Other Items Before FCF
-829,320 -560,064 -489,355 -859,184 -880,560 -938,368
FCF After Acquisitions and Divestitures
-152,214 -55,281 232,144 113,752 330,332 404,970
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 8
FCF Margin (After Net Acquisitions) (%)
-3.1 -1.1 4.5 2.0 5.5 6.5
COVERAGE RATIOS
FFO Interest Coverage (x)
5.1 3.8 4.6 6.3 7.5 8.3
FFO Fixed Charge Coverage (x)
5.1 3.8 4.6 6.3 7.5 8.3
Operating EBITDAR/ Interest Paid + Rents (x)
6.1 5.1 5.2 7.6 9.0 10.1
Operating EBITDA/ Interest Paid (x)
6.1 5.1 5.2 7.6 9.0 10.1
LEVERAGE RATIOS
Total Adjusted Debt/ Operating EBITDAR (x)
3.8 4.5 4.0 2.5 2.2 2.0
Total Adjusted Net Debt/Operating EBITDAR (x)
3.3 3.8 3.4 2.2 1.8 1.5
Total Debt with Equity Credit/Operating EBITDA (x)
3.8 4.5 4.0 2.5 2.2 2.0
FFO Adjusted Leverage (x)
4.6 5.9 4.5 3.0 2.6 2.4
FFO Adjusted Net Leverage (x)
4.0 5.1 3.8 2.6 2.1 1.8
How to Interpret the Forecast Presented
The forecast presented is based on the agency’s internally produced, conservative rating case forecast. It does not represent the forecast of the rated issuer. The forecast set out above is only one component used by Fitch to assign a rating or determine a rating outlook, and the information in the forecast reflects material but not exhaustive elements of Fitch’s rating assumptions for the issuer’s financial performance. As such, it cannot be used to establish a rating, and it should not be relied on for that purpose. Fitch’s forecasts are constructed using a proprietary internal forecasting tool, which employs Fitch’s own assumptions on operating and financial performance that may not reflect the assumptions that you would make. Fitch’s own definitions of financial terms such as EBITDA, debt or free cash flow may differ from your own such definitions. Fitch may be granted access, from time to time, to confidential information on certain elements of the issuer’s forward planning. Certain elements of such information may be omitted from this forecast, even where they are included in Fitch’s own internal deliberations, where Fitch, at its sole discretion, considers the data may be potentially sensitive in a commercial, legal or regulatory context. The forecast (as with the entirety of this report) is produced strictly subject to the disclaimers set out at the end of this report. Fitch may update the forecast in future reports but assumes no responsibility to do so.
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 9
Rating Navigator
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 10
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 11
Simplified Group Structure Diagram
Simplified Organizational Structure — Empresas CMPC S.A.(As of June 30, 2018)
IDR – Issuer Default Rating.
Source: Empresas CMPC S.A.
Empresas CMPC S.A.
IDR — BBB/Stable
Inversiones CMPC
IDR — BBB/Stable
Forestal Mininco
CMPC Celulosa CMPC Papeles CMPC Tissue
100.00%
100.00% 100.00%
100.00%
CMPC Maderas
100.00%
100.00%
Servicios
Compartidos CMPC
Papeles CordilleraCartulinas CMPC
Chimolsa EDIPAC
Envases Impresos
Roble Alto
Forsac Argentina
Sorepa
Forsac Chile
Papelera del Plata
Bosques del Plata
Protisa Peru
Ipusa
Dypers Andina
Absormex
Melhoramentos
Protisa Ecuador
Forsac Peru
Forsac Mexico
Rio Grandense
100.00%
100.00%
100.00%
100.00%50.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
99.90%
100.00%
100.00%
99.61%
100.00%
100.00%
100.00%
100.00%
Chile
Argentina
Peru
Uruguay
Colombia
Mexico
Brazil
100.00%
Matte Group Chilean and Foreign Investors Chilean Pension Funds
56.00% 10.00%34.00%
Ecuador
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 12
Peer Financial Summary
Company Date Rating Operating EBITDA (Before
Income from Associates)
(USDm)
Readily Available Cash
(USDm)
Total Adjusted Debt with
Equity Credit (USDm)
Cash Flow from
Operations (USDm)
Total Adjusted Net Debt/
Operating EBITDAR (x)
Empresas CMPC S.A. 2017 BBB 1,078 683 4,318 721 3.4
2016 BBB+ 970 596 4,315 505 3.8
2015 BBB+ 1,099 561 4,194 677 3.3
Celulosa Arauco y Constitucion S.A.
2017 BBB 1,302 590 4,337 1,067 2.9
2016 BBB 1,027 592 4,614 732 3.9
2015 BBB 1,276 500 4,533 860 3.1
Masisa S.A. 2016 B+ 119 64 731 52 5.6
2015 B+ 157 110 817 34 4.5
2014 BB 194 114 768 18 3.4
Fibria Celulose S.A. 2017 BBB– 1,522 2,017 6,819 834 3.3
2016 BBB– 1,070 1,442 5,513 1,118 3.6
2015 BBB– 1,618 655 3,722 1,177 2.2
Suzano Papel e Celulose S.A. 2017 BBB– 1,397 819 3,977 912 2.3
2016 BB+ 1,061 1,134 4,618 895 3.1
2015 BB 1,340 627 4,150 777 3.1
Klabin S.A. 2017 BB+ 842 2,501 6,053 656 4.4
2016 BBB– 642 1,984 5,804 225 5.6
2015 BBB– 578 1,437 4,713 437 6.6
Eldorado Brasil Celulose S.A. 2017 B 540 180 2,444 283 4.3
2016 B+ 365 370 2,794 192 6.2
2015 452 353 2,411 230 5.3
Source: Fitch Ratings.
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 13
Reconciliation of Key Financial Metrics
(USD Thousand, As reported) 31 Dec 2017
Income Statement Summary
Operating EBITDA 1,078,287
+ Recurring Dividends Paid to Non-controlling Interest 0
+ Recurring Dividends Received from Associates 0
+ Additional Analyst Adjustment for Recurring I/S Minorities and Associates 0
= Operating EBITDA After Associates and Minorities (k) 1,078,287
+ Operating Lease Expense Treated as Capitalised (h) 0
= Operating EBITDAR after Associates and Minorities (j) 1,078,287
Debt & Cash Summary
Total Debt w ith Equity Credit (l) 4,318,218
+ Lease-Equivalent Debt 0
+ Other Off-Balance-Sheet Debt 0
= Total Adjusted Debt w ith Equity Credit (a) 4,318,218
Readily Available Cash [Fitch-Defined] 682,754
+ Readily Available Marketable Securities [Fitch-Defined] 0
= Readily Available Cash & Equivalents (o) 682,754
Total Adjusted Net Debt (b) 3,635,464
Cash-Flow Summary
Preferred Dividends (Paid) (f) 0
Interest Received 15,588
+ Interest (Paid) (d) (208,442)
= Net Finance Charge (e) (192,854)
Funds From Operations [FFO] ( c) 764,875
+ Change in Working Capital [Fitch-Defined] (43,376)
= Cash Flow from Operations [CFO] (n) 721,499
Capital Expenditures (m) (485,756)
Multiple applied to Capitalised Leases 0.0
Gross Leverage
Total Adjusted Debt / Op. EBITDAR* [x] (a/j) 4.0
FFO Adjusted Gross Leverage [x] (a/(c-e+h-f)) 4.5
Total Adjusted Debt/(FFO - Net Finance Charge + Capitalised Leases - Pref. Div. Paid)
Total Debt With Equity Credit / Op. EBITDA* [x] (l/k) 4.0
Net Leverage
Total Adjusted Net Debt / Op. EBITDAR* [x] (b/j) 3.4
FFO Adjusted Net Leverage [x] (b/(c-e+h-f)) 3.8
Total Adjusted Net Debt/(FFO - Net Finance Charge + Capitalised Leases - Pref. Div. Paid)
Total Net Debt / (CFO - Capex) [x] ((l-o)/(n+m)) 15.4
Coverage
Op. EBITDAR / (Interest Paid + Lease Expense)* [x] (j/-d+h) 5.2
Op. EBITDA / Interest Paid* [x] (k/(-d)) 5.2
FFO Fixed Charge Cover [x] ((c-e+h-f)/(-d+h-f)) 4.6
(FFO - Net Finance Charge + Capit. Leases - Pref. Div Paid) / (Gross Int. Paid + Capit. Leases - Pref. Div. Paid)
FFO Gross Interest Coverage [x] ((c-e-f)/(-d-f)) 4.6
(FFO - Net Finance Charge - Pref. Div Paid) / (Gross Int. Paid - Pref. Div. Paid)
* EBITDA/R after Dividends to Associates and M inorities
Source: Fitch, based on information from company reports.
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 14
Fitch Adjustment Reconciliation
(USD Thousand, As reported)
Reported
Values
Sum of Fitch
Adjustments
Cash
Adjustment
- CORP -
Factoring
Other
Adjustment
Adjusted
Values
31 Dec 17
Income Statement Summary
Revenue 5,143,074 0 5,143,074
Operating EBITDAR 766,623 311,664 311,664 1,078,287
Operating EBITDAR after Associates and Minorities 766,623 311,664 311,664 1,078,287
Operating Lease Expense 0 0 0
Operating EBITDA 766,623 311,664 311,664 1,078,287
Operating EBITDA after Associates and Minorities 766,623 311,664 311,664 1,078,287
Operating EBIT 317,323 311,664 311,664 628,987
Debt & Cash Summary
Total Debt With Equity Credit 4,116,218 202,000 202,000 4,318,218
Total Adjusted Debt With Equity Credit 4,116,218 202,000 202,000 4,318,218
Lease-Equivalent Debt 0 0 0
Other Off-Balance Sheet Debt 0 0 0
Readily Available Cash & Equivalents 832,754 (150,000) (150,000) 682,754
Not Readily Available Cash & Equivalents 0 150,000 150,000 150,000
Cash-Flow Summary
Preferred Dividends (Paid) 0 0 0
Interest Received 15,588 0 15,588
Interest (Paid) (208,442) 0 (208,442)
Funds From Operations [FFO] 764,875 0 764,875
Change in Working Capital [Fitch-Defined] 115,624 (159,000) (159,000) (43,376)
Cash Flow from Operations [CFO] 880,499 (159,000) (159,000) 721,499
Non-Operating/Non-Recurring Cash Flow 0 0 0
Capital (Expenditures) (485,756) 0 (485,756)
Common Dividends (Paid) (4,776) 0 (4,776)
Free Cash Flow [FCF] 389,967 (159,000) (159,000) 230,967
Gross Leverage
Total Adjusted Debt / Op. EBITDAR* [x] 5.4 4.0
FFO Adjusted Leverage [x] 4.3 4.5
Total Debt With Equity Credit / Op. EBITDA* [x] 5.4 4.0
Net Leverage
Total Adjusted Net Debt / Op. EBITDAR* [x] 4.3 3.4
FFO Adjusted Net Leverage [x] 3.4 3.8
Total Net Debt / (CFO - Capex) [x] 8.3 15.4
Coverage
Op. EBITDAR / (Interest Paid + Lease Expense)* [x] 3.7 5.2
Op. EBITDA / Interest Paid* [x] 3.7 5.2
FFO Fixed Charge Coverage [x] 4.6 4.6
FFO Interest Coverage [x] 4.6 4.6
*EBITDA/R after Dividends to Associates and M inorities
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 15
FX Screener
About 55% of CMPC’s revenues are denominated in U.S. dollars and 22% in Chilean pesos and Brazilian reals, while
46% of costs are denominated in U.S. dollars and 40% in Chilean pesos and Brazilian reals. The depreciation of local
currencies has a positive effect on the company’s margins.
2,828,6911,869,802
958,889
483,415
204,826
278,589
3,402,9813,402,981
2,314,3832,194,985
119,39853,713
477,928
0378,109
-46,106
-20%
0%
20%
40%
60%
80%
100%
Revenue* Costs* EBITDA Total debt* Total cash* Net debt*
Reported currency (ST) Reported currency (LT)
Foreign currency (ST) Foreign currency (LT)
Fitch FX Screener
Source: Fitch
(Empresas CMPC S.A. — BBB/Stable, Dec-17, USDth)
*Post hedge, absolute figures displayed are Fitch’s analytical estimates, based on publicly available information
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 16
Full List of Ratings
Rating Outlook Last Rating Action
Empresas CMPC S.A.
Long-Term Local Currency IDR BBB Stable Affirmed 9 August 2018
Long-Term IDR BBB Stable Affirmed 9 August 2018
Long-Term National Scale Rating AA–(cl) Stable Affirmed 9 August 2018
National Equity Rating Primera Clase Nivel 1(chl)
Affirmed 9 August 2018
Short-Term National Scale Rating N1+(cl) Affirmed 9 August 2018
Inversiones CMPC
Long-Term Foreign Currency IDR BBB Stable Affirmed 9 August 2018
Long-Term National Scale Rating AA–(cl) Stable Affirmed 9 August 2018
Short-Term National Scale Rating N1+(cl) Affirmed 9 August 2018
Senior Unsecured Long-Term Notes BBB Affirmed 9 August 2018
Senior Unsecured Long-Term Debt Denominated in Chilean Pesos
AA–(cl) Affirmed 9 August 2018
Senior Unsecured Short-Term Debt Denominated in Chilean Pesos
N1+(cl) Affirmed 9 August 2018
CP Denominated in Chilean Pesos AA–(cl) Affirmed 9 August 2018
Related Research & Criteria
Equity Rating Criteria in Chile (August 2018)
National Scale Ratings Criteria (July 2018)
Parent and Subsidiary Rating Linkage (July 2018)
Corporate Rating Criteria (March 2018)
Analysts
Fernanda Rezende
+55 21 4503-2619
Rodolfo Schmauk
+56 2 2499-3341
Corporates
Natural Resources / Chile
Empresas CMPC S.A.
August 15, 2018 17
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