Good morning, and thank you for joining CMPC's first quarter 2026 earnings call. I'm Sebastián Moraga, CFO of CMPC. Joining me today are Francisco Ruiz-Tagle, CEO of CMPC; Guilherme Viesi, Commercial Officer of Pulp; and Claudia Cavada, Head of IR. Before we begin, please refer to the standard note on the forward-looking statements in this presentation. Before we dive into the numbers, I want to share how we are reading this quarter. The opening of 2026 has been about discipline, tightening the cost base, protecting the margin, and continuing to build the integrated value chain we announced last year. There are three takeaways for the first quarter that I like to keep in mind. First is Guaíba mill maintenance. The annual downtime of both lines was on schedule and drove a decline in production and an increase in cash costs for hardwood.
Second, our cost discipline is starting to pay off, which is reflected in recovered margin levels at Biopackaging and EBITDA expansion in Softys. Third, regarding Natureza project, our strategic agenda is on track to enable the board decision to take place during this year. To the headline numbers. Sales of $1.8 billion were essentially flat year-over-year and down 4% quarter-over-quarter. Consolidated EBITDA was $255 million at a 14.1% margin, down 2% versus the fourth quarter and 8% versus first quarter of 2025. Net income reached $25 million. We will comment EBITDA and net income later in the presentation. Let's go to the consolidated P&L drivers. On the left, sales of $1.8 billion broken down by business.
Pulp at $731 million, Softys at $835 million, Biopackaging at $247 million. Versus fourth quarter of 2025, Pulp was down $36 million, mainly due to lower volumes sold, especially in China. Softys was $33 million lower on both tissue and personal care volumes. Biopackaging eased $7 million on a weaker corrugated demand in Chile. Operating cost of $1.2 billion with a stable ratio over sales. Other operating expenses of $332 million sat at 18% of sales. On EBITDA, in the quarter, it decreased $7 million as the combination of $13 million decrease on the Pulp business, given lower volume sales, as well as lower volume in Softys, reflected in an EBITDA decline of $11 million. This was partly offset by an increase of $16 million in Biopackaging EBITDA.
Versus the first quarter of 2025, Pulp decreased $37 million on volume, Biopackaging lost $8 million on volume reduction, and Softys added $16 million. As a result, consolidated EBITDA was $23 million below the prior year quarter. Net income came at $25 million, down 33% quarter- on- quarter. The main driver is below the EBITDA line, a reduction in the valuation of forest plantations driven by lower discount rates. That was partially offset by a positive $17 million tax effects on Brazilian real appreciation revaluing deferred taxes. Year- on- year, the decline is mainly explained by higher SG&A in Softys. CapEx came in at $185 million, up 24% year- on- year, with maintenance making up 56% of the spend and growth roughly 35%. We continue to invest behind the integrated value chain.
Now I'd like to turn the presentation over to Claudia, who will provide more details on our results by business.
Thank you, Sebastián, good morning, everyone. On Pulp business, during the first quarter, sales reached $731 million, down 5% sequentially and 7% year-on-year. This was almost entirely on hardwood, where third-party volumes fell 12%. This was explained by lower exports to China. Softwood volume was stable. Pricing moved upwards. Hardwood price average $561/ ton, up 6.1% sequentially, softwood price average $674/ ton. This is 1.7%. EBITDA was $155 million with a 21.2% margin. The headline cost driver this quarter was the planned Guaíba One and Two lines maintenance. That took our hardwood cash cost to $262/ton . This is 15% above the fourth Q 2025.
Softwood cash cost held at $400 / ton. Let's discuss our Softys business. Softys delivered $835 million in sales, up 11% year-on-year on the Falcon integration in Brazil and a richer personal care mix. Sales were down 4% sequentially on softer tissue and diaper volumes in Chile, Brazil, and Mexico. The market backdrop remains uneven. Chile, Peru, and Uruguay are constructive for us. Brazil and Mexico continue to face the context of overcapacity we flagged in mid-2025. EBITDA of $97 million at an 11.7% margin compared to 12.4% in 4Q 2025. The sequential dip is volume-driven, partially offset by savings from the Maxio efficiency program.
On the year-over-year comparison, EBITDA was up 20% driven by Falcon, lower fiber cost effects together with the effects of a better sales mix. Inside personal care, we're seeing positive trends in feminine cares and wipes, and our diaper category is growing 4% year-on-year despite the seasonally weak first quarter. Now let's discuss our Biopackaging business. Biopackaging had a recovery during this quarter at the EBITDA level. Sales were $247 million, down 3% sequentially and 9% year-on-year, reflecting tougher market conditions and the strategic decision to prioritize margin over volume. In the quarterly comparison, EBITDA reached $23 million at a 9.4% margin, up from the fourth Q 2025. Two effects matter here. The fourth Q 2025 carried inventory write-downs and warranty provisions in the corrugated business. Those did not repeat this quarter.
The efficiency initiatives we rolled out through 2025 are now visible in the cost line. In the year-on-year comparison, EBITDA was down 25% 'cause fixed costs don't fully flex with volume, but the sequential trajectory is what we expected to see, and the portfolio rationalization should continue to support margins through 2026.
Thank you very much, Claudia. We ended the first quarter of the year with roughly $5 billion of net debt. Net debt- to- EBITDA stands at 4.1 x. We expect progressive normalization through 2026, supported by results evolution, working capital optimization, and operational efficiencies. As we have mentioned on previous earnings calls, we are also evaluating asset monetization alternatives that could further strengthen the balance sheet. Investment grade rating status was reaffirmed across all three agencies, S&P, Fitch, and Moody's, the three with stable outlook.
Thank you, Sebastián. Recall that we welcome your questions, and you can participate just by raising your hand or typing in the chat box. We have our first question coming from Rafael Barcellos from Bradesco. Rafael, the floor is yours.
Good morning. Good morning, and thanks for taking my questions. My first question is about.. Can you hear me?
Yes, very well. Yes.
Okay. My, sorry. My first question is about your Pulp cost. Can you please elaborate a bit further on your cash costs, ex maintenance downtime? How should we think about the cash costs in the coming quarters? Also, if you can remind us what you have in terms of maintenance downtime scheduled for the rest of the year could be helpful. Then my second question about [Non-English content]if you can help us understand the, you know, the current pulp cycle. I mean, if you can just elaborate on what you see in terms of the main trends. I mean, softwood markets have been very challenging, right?
I mean, if you can, you know, discuss a little bit more softwood markets and then the implications for the hardwood. Thank you.
Hi, Rafael. This is Francisco Ruiz-Tagle. How are you? Well, first question, in connection with the cash cost of CMPC. I would say probably you will see an increase of the cash cost during this report compared with the first quarter. It has a lot to do with the maintenance of a Guaíba mill. We had the scheduled maintenance for Guaíba One and Guaíba Two, so the cash costs are pretty much influenced by those activity. When you talk about ex-maintenance, I would say, we continue with the situation, with the cash cost in a very competitive, you know, trend. Although we have been, you know, we have had some increase in wood prices during this year compared with the last year.
The main change in the cash cost has to be with the maintenance in January of Guaíba One and Guaíba Two. What is going to happen during the rest of the year according to the scheduled maintenance, actually the main operation already stopped. During the second semester, we should have Santa Fe mill with maintenance and basically Pacífico. This more or less regarding the rest of the year. I'd like to add something that could be interesting to mention now, is that I'm not sure if you heard about that, but we had an unexpected stoppage in Guaíba this week, and it was actually a problem.
It was another, a non-scheduled maintenance, and it was because we decided to stop the mill because we had a kind of a problem in the upper part of the boiler in Guaíba Two. We are now in the process of maintenance now. When you have problem in the boiler, as you know, you have to cool the boiler, and it takes a couple some days. We will have that line stopped by probably eight to or close to 10 days, huh? This is not part of the scheduled maintenance in the year. It's kind of a typical maintenance. It was a problem in the upper part of the boiler, and to solve that, it would take 10 days, huh?
Just to mention that, it's important for me to transmit that.
Guilherme can take the second question.
Sure. Rafael, thank you for the question. Well, we find ourselves in the market. I would consider the market balanced, with different characteristics in different markets. The demand overall in the market is actually good. China comes with a good demand. I think with the problem of paper prices in China remains, overcapacity of production remains. Let's not forget that we come from price increases pretty much since the half of last year. Prices have been steadily going up little by little. We came out of a Shanghai Pulp Week with a price increase, which is something that doesn't happen every year. I would call the attention for the European market. European market is slightly tighter than the rest of the world. There is a price announcement of $50 gross for May now.
Specifically about softwood, as you said, softwood is on a slightly different trajectory. Is softer, oversupplied. The domestic supply of softwood in China remains, and that obviously affects the rest of the world. We had a price decrease last month. Softwood in China is now trading at around $650 net. That puts further pressure on softwood producers, mainly on North America, Canada, and Scandinavia. It is of our view that the capacity will continue to be reduced, will continue to be under pressure, and there will be further closures. As we have seen throughout last year and this year, there will be further closures in the softwood market.
Eventually rebound, prices should rebound.
Okay. As a follow-up question, given the more challenging operational scenario for the, you know, for the second quarter, as you describe it, and, you know, you're already running with a higher leverage. I mean, how do you see your leverage evolving through the year and, you know, how prepared do you think the company is to receive or to start the disbursements of the Natureza project? I mean, if you can just elaborate a bit more on your views on the, you know, leverage evolution and your latest thoughts on the Natureza project, could be good.
If you had any recent talks with the rating agencies, if you have any discussions about the leverage, what are the considerations they are making, could be interesting for us to understand. Thank you.
Rafael, hi. This is Sebastián. Regarding leverage, as we disclosed in our report, we believe that the 4.1% will have a downturn trend during the year, basically driven by efficiencies in cost, which will have an impact on better results, and also the working capital efforts we are performing. Additionally to that, we have been mentioning the potential asset monetization ventures that we are pursuing, which for obvious reasons I cannot give much color into that. Once they obviously materialize, we could give more information to the market. Regarding rating agencies, we are very close to them. We are having, I would say, first of all, it is important to mention that we were downgraded by Fitch as expected to BBB-.
Today CMPC is BBB- in Moody's, Fitch, and Standard & Poor's. Three, the three with a stable outlook. Regarding how we expect to move forward with Natureza in terms of indebtedness and the strategy of financing it, yes, we are very close to the rating agencies. They are very well acquainted to our strategy in order to, again, keep the investment rate status at announcement during the construction and once we finish Natureza. Regarding Natureza, I would say, Francisco, if you wanna take that question.
Okay. Just to say, last part of the question, Rafael, your question and connected with this challenging operational quarter. Just to say that the mills have been running at a good efficiency.
What I mentioned has to be with a kind of a problem that you can have in a mill. We are stopping for some days, but not seeing, you know, this situation as a, you know, big problem for the company. I would expect that it will continue running at a good pace, and also with a very competitive costs. Better cost compared with the first quarter. Very much influenced, as I said, because of the scheduled maintenance in January. Regarding Natureza, well, Natureza, I wouldn't say that that decision could affect, you know, the short term, the level of debt of the company. The decision will not be taken, I mean, within the next couple of months.
It will take more time. We are still in the process of permission. We are expecting for a [Non-English content] or previous license. We should have that within the next couple of months. It will take probably some more weeks getting the installation license. We are not deciding this project until some more months. What Sebastián said, according with our plans of financing and monetization of some assets, my impression is that is very well coordinated with all of our decisions.
Okay. Very clear. Thank you.
Thank you, Rafael. Recall that you can make your questions in any moment just raising your hand or typing in the chat box. We have a next question from Itaú, Marcelo Furlan. Marcelo, good morning.
Hi. Morning, everyone. Can you hear me?
Yes. Yes, we can hear you.
Okay. Okay, guys. Thank you for taking my questions. My question is actually, you know, a follow-up from the previous one related to the company expectation of the financial and the leverage. Could you please elaborate a little bit more, given the fact that maybe the top line for the next months, at least in the pulp, would be more challenging. What are the main efforts the company should have or we should expect in terms of EBITDA improvement and free cash flow and a stronger free cash flow generation that, you know, could be made through the company's self-help initiatives, that actually could, you know, improve that and then lead to this financial leverage moving forward? This is my first question.
My second question is, what are the expected, you know, financial leverage ratio you guys believe could be reached by year-end, assuming no CapEx for Natureza and assuming no forest investments or things like that? These are my main questions. Thank you, guys.
Marcelo, regarding your first question, I would probably mention again, efficiencies in cost, revising CapEx, and working capital efficiencies. That is what is under the prices of pulp, and that's where we are, I would say, revising every of these three concepts very thoroughly in order to bring better costs and better financial management into the company. Regarding ratings, more than giving a number per se, I would say that our aim is to be a solid BBB- investment grade company. We are following what three rating agencies state as complying with that status.
Again, we are having numerous conversations with them, not only with the trajectory of our leverage without Natureza, but also we're working with them in case we were to prove Natureza, what are our, all our financial tools and resources in order to, again, with Natureza on the balance sheet, still be in compliance with being an investment grade company.
Okay. Thank you so much, guys.
Thank you, Marcelo. We have another question coming from Goldman Sachs, Marcio Farid. Marcio, good morning.
Thanks, Claudia. Thanks, everybody. Good morning. Francisco, just wanted to follow up on Natureza. It seems like you've changed the language a little bit in terms of timing. Our expectation was for a decision potentially by end of second quarter. Obviously you're talking, you mentioned, you know, a few months in order to get licenses done and so on and so forth. Just wondering if there has been any change in terms of how you know, you approach the investment decision, given, you know, we obviously There's a war happening. There's a lot of market uncertainties as well. Just trying to understand if just, you know, the language has changed just because of licensing conditions or anything else.
Maybe a follow-up on the pulp side to Guilherme. Guilherme, you mentioned Europe doing a little bit better than China. Wondering if, obviously softwood has been under pressure in China. The last couple of push for higher prices on the hardwood side have only partially been implemented. Wondering what do you think is gonna be the next step here? Are we gonna get, you know Is it a push for higher price makes sense, obviously cost going up, but then paper price, as you mentioned, under pressure in China? Wondering what's the next steps in China? I think, you know, hardwood at $600 cannot. It's an okay price, right?
It's, let's see. Softwood on, at $650, seems to be weak. Is there any room for, you know, that kind of spread to normalize as well? Thank you very much.
Thank you, Marcio, for your question, and I will take the first part, then I will just pass. In connection with the final decision about Natureza, yeah, you're right. We were expecting to have everything ready for the mid-year. Actually, we have talked about the end of the second quarter or during the third quarter. Basically what has been happening is that the previous license supposed to be ready by the beginning of this year, and we were asked about some extra question connected with social aspects of, and impacts of this project in Rio Grande do Sul. It took actually more time in, you know, responding from our side.
It is taking a couple, two or three more months in getting the previous license , which is an important moment for us. This is the main reason why we're moving from mid-year to some extra more months. Just to say that the company is fully committed with the project. We see this project as a very important for CMPC. Of course, we're also taking into account for our decision, and our board has transmitted that it will be a very responsible decision, very committed with the project, with the idea for the future of CMPC. It will be a responsible decision considering what is happening around the world. And it is true that uncertainty is very important today.
I don't have to speak about that because you know more than us about that. Everything will be considered for that. The main reason for moving a bit ahead, the revision, hopefully final revision of this project is because of the it took some more time, the environmental permits process.
Can I just follow up?
we move to Guilherme? Quickly, just, there was a news, I think a couple of months ago, saying that I think, an indigenous community in the area was complaining about the project. Is that something that should be worry or is it just more of about, you know, getting social recognition and social license as well for the project?
It is connected with some, it was a prosecutor in Rio Grande do Sul, one person that ask and ask about CMPC, and actually not CMPC, FEPAM and FUNAI, those institutions, about, you know, requiring some, you know, to consider recommendation of some indigenous communities. What my comment on that is we have been responding everything that the law is requiring for this kind of projects. We are 100%, you know, focused on responding the what the law is asking us. My impression is that we are doing a right process.
Regarding the comment of this, or the recommendation of this prosecutor in Rio Grande do Sul, there was a kind of a federal council of a [Non-English content] Some days ago, 10 days ago, they said that this is not correct, and they are recommending FUNAI and FEPAM, the environmental authority, to continue with the normal, you know, process of, you know, of the approving this kind of project. Of course, it's always when you are required something like that, it's something that's challenging us, you know. We feel very comfortable with the all our responses and the studies that we have done connected with the indigenous, you know, situation. It's a matter of concern.
Always when you don't have still the license could be, but we feel honestly very 100% comfortable about, you know, having a kind of a very positive process.
Thank you very much.
Thanks for the question. Regarding hardwood, yes, you're right that $600 is not a bad price, but let's remind ourselves that cost doesn't really determine the price of the commodity in the world. What determines the price is supply and demand. This year, we do not have any new capacity of pulp coming into the market. From a purely supply-demand perspective, we should see prices going up because market is growing organically every year. Again, different markets with different dynamics. I do see Europe with more space for price increase this year. Europe already has a gap to China of something around $50, give or take, with another price increase announced for this month. We could see Europe opening a gap to China of, I don't know, $75- $80, something like that.
We see momentum, we see inventories in Europe on a low level. We see shipments being diverted from China to Europe because it's paying a higher margin, and China could find themselves with a tight inventory in the next few months. Going to softwood, you're right, the gap from hardwood to softwood I think is unsustainable now. The price of softwood is low. I think statistics will say that something around 80%-90% of the world's softwood production is below break even as we speak with the current price levels, so we should see further closures on the softwood. Again, then prices of softwood should rebound and to a more sustainable gap between softwood and hardwood. Overall, in summary, I see a 2026 with opportunities of further price increases.
If there's no surprise on the economical side globally, we should see prices continue in the same trend, modestly, not with huge jumps in price increase, but modestly the trend should be upwards on the hardwood, and eventually when we see closures on softwood, the same.
Great. Thanks, Guilherme. Thanks, Francisco. Can I just follow up on a comment you made earlier? You mentioned an issue at Guaíba with the recovery boiler, and you talked about 10 days. Is that extra in addition to the first half maintenance downtime, and is it gonna be impacting Guaíba One and Guaíba Two, or is it just one of the lines? Thank you.
It's extra, and it's just impacting Guaíba Two.
Great. Thank you very much.
Thanks, Marcio. We have another question coming from Scotiabank, Alfonso Salazar. Alfonso, good morning.
Yes, good morning. I have a question on Natureza. Look, I think that to build a project this size, it's very important to take into consideration the outlook for demand in five, 10, 15 years. When we look what is happening in China, well, here are the facts. Population is in a downtrend. Consumption is weak, and it's hard to see why it's going to recover. More people are going to be living in a low pension going forward, and the ratio between the people, working people and the supporting people that is supporting retired people is going to deteriorate very fast, very sharply. Those are the trends that, you know, people are considering for in their base case for China.
Wondering if to what extent the Natureza project is supported by China, or are you seeing growth and opportunities in other markets? And where exactly, right? Maybe it's Europe, maybe it's more for the Americas. Just wanted to reconcile this situation because to me we have seen demand of commodities starting to be, you know, under pressure in China, and I don't know if, you know, seeing the big increase in demand in China in terms of pulp and paper in the past is a good, you know, predictor of what's gonna happen in the future. I just want to hear your thoughts.
This is Raimundo. I'll take your question, Alfonso, which is very good. What we see basically is that China paper consumption continue to increase. The main trend behind has to do with the middle class. China has approximately 400 million people in middle class today and their plan is that for another 400 million will become middle class in the next 15 years. That's a very relevant trend for basic products consumption. I mean, paper at the end of the day is a very basic product. It's used in every day's life. It's not expensive product.
Middle class is a key theme, and China is in a process, has been, and it continue to be in a process where people is becoming middle class and therefore paper consumption increases. At the same time, the importation of the growth on pulp import will be slower than before, mainly because China have been producing their own pulp, no? That therefore has limited the growth on imports. In our plans for Natureza, we're estimating that the imports of pulp in China will grow at a slower rate, roughly about 40%-50% is lower than than before.
We'll continue to grow, but at a slower pace mainly for what I just said regarding their own production, not because the demand will be much slower. We are forecasting growth in other markets. I think some markets that are relevant to mention are India, for example, where their growth percentage-wise is quite impressive. In terms of absolute volume, it's not huge, but it's relevant, I would say. We today, India imports close to 1.5 million tons-1.7 million tons, and that number can easily double in the next 10 years. We are a relevant player on that market. We also grow, see steady growth in North America. There's also a situation where some mills will probably close.
There's the age of the mills in the Northern Hemisphere that will also produce a space for demand. You have fiber substitution, you know, which is also relevant. All in all, what we are forecasting is a market that will continue to grow for short fiber around 900,000 tons per year, which is a little bit slower than before, and as I said, with China being relevant but a slower percentage of the whole growth.
Can we say that China remains part of the strategy? You have, you see opportunities in other markets like India, for example, you also see high-cost mills leaving the market eventually as they age. It's a combination of everything.
Absolutely. I think we're talking about paper is a relatively mature market, so it's the demand will not explode. It's a mature market and companies need to have a very healthy and low cost base, you know. We do see growth in the paper market at a steady growth, as I mentioned.
Fair enough. Thank you.
Thanks, Alfonso. I see that we don't have more hands raised here, and in the chat box I see that the questions were basically covered by the call. I think that we can finish this earnings call. Thank you very much for attending today and for your participation. We wish you have a good day.