Good morning, and thank you for joining CMPC's third quarter 2026 earnings call. I'm Sebastián Moraga, CFO of CMPC. Joining me today are Francisco Ruiz-Tagle, CEO of CMPC, Guilherme Viesi, Chief Commercial Officer of Pulp, and Diego Merino, Finance Director Brazil and Head of Investor Relations. Before we begin, please refer to the standard note on the forward-looking statements in this presentation. Before reviewing the financial results, I want to share the key messages for this quarter. Overall, the third quarter reflected resilient activities across our businesses, with higher consolidated sales and volumes, while profitability continued to be affected by pricing and cost pressures.
That being said, the key takeaways for this quarter are: First, regarding portfolio management actions, we announced two transactions totaling $785 million, the sale of our corrugated packaging business in Chile for $420 million, and the sale of approximately 60,000 hectares of forest assets in the Maule region for $365 million. These asset monetizations reflect active portfolio management and strategic focus. Their financial effects will be recognized when the respective closing conditions are met. These asset monetizations reflect active portfolio management, increased strategic focus, and concrete progress towards strengthening our financial position. Second, regarding our business performance, pulp showed solid operational momentum, with third-party sales volume increasing 2% quarter-on-quarter, supporting stable sales despite lower realized prices. Adjusted EBITDA reached $159 million, reflecting lower realized prices, higher logistic costs, and approximately $10 million of identified one-time effects.
Softys maintained sales broadly stable quarter-over-quarter at $897 million, while EBITDA declined 12% to $89 million as higher fiber and diesel. Linked inputs cost more than offset pricing actions and efficiency initiatives. In biopackaging, EBITDA increased 39% to $21 million, supported by the recovery in corrugated segment with normalization at Papeles Cordillera and higher boxboard volumes. Regarding Natureza, FEPAM granted the preliminary license in October. This confirms the environmental feasibility of the proposed location, but it does not authorize construction. We continue advancing the enabling conditions, including engineering, the forest base, logistics, and financing under strict value creation and financial discipline criteria. Turning to the headline numbers, consolidated sales reached $1.9 billion, up 1% quarter-on-quarter and 4% year-on-year. Adjusted EBITDA was $252 million, with 13% margin, down 7% sequentially and 3% year-on-year. Net income was a loss of $7 million.
We will explain the main EBITDA and net income drivers in the following slides. Going to the consolidated P&L drivers. Sales increased by $16 million quarter-over-quarter. Pulp sales were stable at $770 million, as higher volumes offset lower realized prices. Softys sales were also broadly stable at $897 million, supported by higher tissue pricing. Biopackaging sales increased 4% to $262 million, driven by higher boxboard and corrugated volumes. Compared with third quarter of 2025, consolidated sales increased 4%. Pulp and forestry sales increased 7%, mainly driven by higher hardwood pulp prices and higher energy sales. Softys sales increased 3%, supported by higher tissue pricing, while biopackaging sales declined 2%. Operating costs reached $1.3 billion, up 3% sequentially, and represented 69% of sales versus 68% in the previous quarter. The increase reflected one-time effects, together with higher raw material costs at Softys and higher logistics costs in pulp.
Other operating expenses declined 2% quarter-over-quarter to $342 million and remained at 18% of sales. Quarter's EBITDA declined by $18 million over previous quarter. Pulp EBITDA decreased by $21 million, mainly due to lower realized prices, higher maritime freight rates, and approximately $10 million of identified one-time effects, including retroactive transmission charges and the write-down of pulp inventory damage at the Rio Grande port. Softys EBITDA also declined as previous increases in fiber and diesel-linked input cost impacted results. These pricing actions are progressively mitigating cost pressures, although their full impact has not yet been reflected in margins. On the other hand, biopackaging EBITDA increased by $6 million, supported by corrugated normalization at Papeles Cordillera and higher boxboard volumes. Versus the third quarter of 2025, consolidated EBITDA was $8 million lower.
Pulp EBITDA declined by $20 million as higher realized hardwood pulp prices were more than offset by higher wood, energy, chemical, and transportation costs, together with currency appreciation. Softys EBITDA was $6 million lower, mainly reflecting higher fiber and diesel-linked input costs. These effects were partially offset by a $3 million improvement in biopackaging, supported by the recovery in corrugated segment, normalization at Papeles Cordillera, and higher boxboard volumes. Net income moved from $9 million in the second quarter of 2026 to a $7 million loss in this quarter, in line with lower EBITDA. CapEx reached $208 million compared with $170 million in last quarter of 2026. Maintenance CapEx was $78 million, mainly due to the general maintenance at Santa Fe, therefore similar to the same period in 2025.
Biological asset investment was $65 million, same as last quarter, whereas other organic CapEx was $64 million, $12 million higher than previous quarter, which accounts for personal care capacities in Brazil and cost reduction initiatives in tissue. Now, I'd like to turn the presentation over to Diego, who will provide more details on our results by business.
Thank you, Sebastián, and good morning, everyone. On pulp business, sales reached $770 million, stable quarter-on-quarter and up 7% year-on-year. Hardwood prices averaged $582 per ton, and softwood averaged $642 per ton, both down 3% quarter-over-quarter. Total pulp production reached 1 million tons, up 1% quarter-over-quarter and stable year-on-year. Hardwood production declined 1% quarter-on-quarter, mainly due to the scheduled maintenance downtime at Santa Fe Line 2, while softwood production increased quarter-over-quarter. Adjusted EBITDA reached $159 million, with a 20.7% margin, down 11% sequentially. The decline mainly reflected lower realized pulp prices, with both hardwood and softwood down 3% quarter-on-quarter, together with higher logistic costs driven by increased maritime freight rates.
Results were also impacted by approximately $10 million of one-time effects, mainly related to a retroactive electricity transmission charge and the write-down of pulp inventories damaged at the Rio Grande port. These effects were partially offset by higher sales volumes. Hardwood cash cost was $253 per ton, down 1% quarter-over-quarter and up 10% year-on-year. During third quarter 2026, Santa Fe Line 2 underwent its scheduled maintenance downtime. Versus second quarter 2026, lower wood and material costs more than offset higher energy and chemical costs related to the mill restart. Year-on-year, the increase mainly reflected higher wood and chemical costs, together with the unfavorable impact of stronger local currencies. Softwood cash cost was $409 per ton, down 2% quarter-over-quarter and up 7% year-on-year.
The decrease versus second quarter 2026 mainly reflects the impact of Laja's scheduled maintenance downtime last quarter. Year-on-year, the increase was mainly driven by higher energy and wood costs, together with the unfavorable impact of the stronger Chilean peso. Next, let's discuss our Softys business. Softys sales reached $897 million, broadly stable quarter-over-quarter and up 3% year-on-year. Versus second quarter 2026, higher prices, particularly in tissue in Mexico, Brazil, and Argentina, offset lower tissue and diaper volumes and unfavorable currency effects. Compared with third quarter 2025, sales growth was supported by higher prices, a favorable currency effect, and higher volumes in feminine care and wet wipes. Adjusted EBITDA was $89 million, with a 10% margin, down 12% quarter-on-quarter and 6% year-on-year.
Versus second quarter 2026, profitability was mainly pressured by higher fiber costs and higher diesel-linked raw material and logistics costs. These pressures were partially offset by pricing actions in tissue. Year-on-year, the decline mainly reflected higher raw material and logistics costs, partially offset by higher prices and favorable currency effect. Now, let's discuss our biopackaging business. Biopackaging sales reached $262 million, up 4% quarter-over-quarter and down 2% year-on-year. Versus second quarter 2026, growth was supported by higher boxboard sales together with stronger corrugated segment sales in Chile and Mexico. Aggregate sales volumes increased by 7%, led by boxboard, corrugated paper, and corrugated boxes. Year-on-year, lower sales mainly reflected weaker sack kraft sales. Adjusted EBITDA reached $21 million, with a 7.9% margin, up 39% quarter-over-quarter and 16% year-on-year.
Versus second quarter 2026, the improvement was driven by the recovery in corrugated segment, the normalization of operations at Papeles Cordillera following scheduled maintenance in second quarter 2026, and higher boxboard volumes, together with lower maintenance expenses. Year-on-year, EBITDA growth mainly reflected higher contribution from corrugated segment, partially offset by lower boxboard results.
Thank you very much, Diego. We ended the third quarter with net debt of $5 billion. Net debt to EBITDA stands at 4.23x, up from 4.17x last quarter. The announced portfolio transactions represent concrete progress towards strengthening our financial position. Their final impact will depend on closing conditions, proceeds received, and the evolution of operating results. Our objective remains to progressively return leverage to our target range while preserving our investment-grade profile.
Thank you, Sebastián. Before we open for questions, Francisco Ruiz-Tagle, CEO of CMPC, would like to address all of you.
Hello. Good morning, everybody. It's a pleasure to meet you today. Well, first of all, before starting the Q&A session, I just wanted to tell a little bit about myself. As you know, I announced my voluntary resignation last Friday as CEO of CMPC after eight years, being a little bit more than actually the eight year being the CEO of the company. This is actually, I would say, a very carefully and planned decision. The reason of that is, well, I already completed an important period of my life here in the company. Of course, it's also very well connected with the succession policy of CMPC. We are now in a process of defining my successor. I'll be in this position 100% committed and fully involved in the strategy, in the day-to-day operation of the company until September 30th, 2027.
This is, I wanted you to just to in person to mention you, and I have had a fantastic experience in this company for many years. I've been here for 35 years. It's an enormous experience, and also had the opportunity to participate in important periods of the life of this company. Internationalization, companies abroad, and the Strategy 2030, of course, a deep involvement in the future and the strategy of the company. Well, thank you very much. I just wanted to tell you this directly. This is my first conference after this resignation. Thank you very much. Then we can continue with the Q&A session.
Please recall that you are all welcome to ask your question. Just raise your hand or in the chat box. Today, we have, alongside Francisco, we have Sebastián Moraga, CFO of CMPC, and Guilherme Viesi, Chief Commercial Officer of Pulp, in the call. Our first question would be from Henrique Marques from Goldman Sachs. Henrique, please, can you hear us?
Hey, guys. Thank you so much for taking my question. You guys hear me?
Yes, perfect.
Go ahead.
Awesome. First of all, I want to congratulate you, Francisco, for your trajectory and wish you the best of luck in your next chapter. My question, I think I want to touch base on the Natureza project. I mean, you guys recently received the preliminary environmental license. Just, if you guys could give us a bit more color on what are the next steps for the project? What is missing now for you guys to take it to the board? What is expectations on timing for that? Because I think we were all expecting that to be in this year. I just wanted to confirm if it's still this year in your guys' perspective, or it's something that could eventually be delayed for next year. Then, just a second question on Softys. I mean, I think the segment remains a bit of a drag.
Margins reaching the lowest level since 2023 during this quarter. I want to refresh expectations for the Softys business. I mean, is anything else to be done inside the house? What are you guys considering to try to improve the business? Do you think it's more about market eventually improving? What is the level of margin that you guys are expecting going forward? Thank you.
Thank you very much for your question. First of all, in connection with Natureza, yes, it was approved the preliminary license some weeks ago. I was informed about that. This is part of the licensing process. Actually, we're still under that process. There's still pending another license, and that is called installation license. We will continue, of course, very committed and hard working on getting that license. This is kind of a normal process. I cannot tell you when this license will be ready. It depends on us, and we have some requirements on that, but also it depends also on the authorities in Brazil. Everything is going normally and without any difficulty. In connection with you were asking me about the timing.
Well, still, we know we are working in the preparation of the project, the engineering, and it's part of, again, a part of the process, working on the financial plan for that project, also on the commercial aspect of the project. At the end of the day, what my response on that is that, of course, this is a kind of a strategic project, as we have said, for CMPC. It will put CMPC in a much more competitive way since it's a very good project. The question is when, and I cannot tell you exactly when will be the final decision of the board. It will depend on several different combination of factors. I would say, though all of them are advancing in a good manner, but at the end of the day, when we're ready, we will inform you.
But still there's several things pending. In terms of tissue, my answer on that is that, well, tissue business for CMPC is a core business for CMPC. As you know, it's pretty close to 50% of the sale of CMPC, if you see that today, a bit close to that. Again, we are in eight different countries in Latin America, and probably where we have the most demanding situation today is in Brazil and Mexico, as we informed before. I would say that we have very concrete plans, I would say, from the cost standpoint, working very hard on making this operation more competitive in those countries, and also on the commercial aspects, both. But very well, I would say, convinced, totally convinced with what we're doing in those markets, and with great opportunity, very good brand names.
Now we are suffering probably this year, in some way, extra capacity in Brazil, but also a situation with cost because of the fuel, and the oil, and the oil cost, and it's affecting raw materials, logistics, and so, of course, affecting those market that has lower margins. The case of Mexico, I would say the same, the competitive situation is important. But in general terms, my answer on that is that we are consolidating our acquisitions and working with a lot of very committed and improving that, and we believe that it's a great business for CMPC.
Thank you, Francisco. Now, Alfonso Salazar from Scotiabank. Alfonso, can you hear us? Alfonso? I think we lost Alfonso. In the meantime, let's move on to a question from Cristóbal from BTG. He sent on the chat, which is, I'm going to read the exact question. It's, you are raising $786 million in asset sales if both transactions are approved. Are you actively seeking to engage in more asset divestiture activities, or are these enough for the time being? That would be the question from Cristóbal from BTG.
Thank you, Cristóbal, for your question. The answer on that is, no, we are working on our balance, as we informed before, and monetizing, especially some business that are not part of the core business of CMPC. So we are taking a look of the footprint of CMPC and, of course, taking decision, preparing the company for the next steps. So, I informed before also that we have probably an amount is bigger compared with the total sales we have done until today, but always open for new opportunity. This is my question. We are not under any particular pressure today for advancing in something more concrete, but open as a company like CMPC, continue seeing opportunities and concentrating in the business where we have the most competitive advantages.
Thank you, Francisco. Now, I think we have Alfonso in the line. Alfonso, can you hear us?
Yes. Can you hear me?
Yes.
Hello? Okay, good.
Please, go ahead.
Thank you. The question that I have is in the biopackaging business, with the sale of the corrugated capacity. Just wondering what's the strategy there? What's the plan going forward for the businesses? Are you planning to divest completely from packaging?
As you know, our corrugated business is mainly based in Chile. Our plants are in Chile. We own, actually, three different conversions in Chile and one paper mill in Chile. This is one of the transactions we already did with Smurfit. We, of course, this is under the transition process and all of the need, and happening all of the requirement we need to transfer that finally to Smurfit. It was a very interesting deal for them and for us. We're not planning any extra capacity in corrugated during this time.
Excellent. Thank you.
Thank you, Alfonso Salazar, for your question. I'm going to move now to another question from the chat from Florencia Palacios from JP Morgan. You have relevant maturities in 2027. How are you planning to address this? This would be the question from Florencia.
I'll take that question. Florencia, as I would say, as we have done in the past, we have always looked at refinancing and use of internal proceeds. Given the last divestments that we announced to the market, we will have a, I would say, a relevant portion of cash. So ultimately, we have enough flexibility to address the relevant maturities that are due in 2027.
Thank you, Sebastián. Now moving on to Juraj from Larraín Vial. Juraj, can you hear us? I think while Juraj is getting back to us, I have another question from the chat, from Harun of Bank of America, which is regarding the recently announced asset sales. What will the proceeds be used for? Can we expect gross debt reduction? I think, Harun, this question was recently answered by Sebastián. So I think, Juraj, you're back on the line?
Can you hear me now?
Yeah, now we can hear you.
Hello. Perfect. Good morning. Thanks for taking our questions. First of all, just to wish all the best for Francisco in the next steps ahead. Moving to my questions, perhaps if you could comment on the tissue market status, and specifically in the Brazilian market. What are you seeing over there? Regarding Natureza, and perhaps more specifically in the port, just to get details on the status of the port development, and if the CapEx of this port is included in the 4.5 forecast for Natureza. Thank you.
Well, thank you very much for your questions. Tissue first in Brazil. I would say my impression is that in Brazil, the tissue business is a kind of a challenging business. In terms of, I would say, the scenario is competitive, the way you have to act in that market is you have to be in a kind of a state-of-the-art player. That's the reason why we're extremely concentrated in improving our cash cost position and, of course, trying to get the best logistic cost for our business there. Of course, also, commercially speaking, we feel comfortable. We have good brand names and a very good connection with the market. I would say it's a demanding and challenging market, but also a great opportunity.
We feel very comfortable in Brazil, and we're pretty sure that we will be able to consolidate in a very good manner what we have done in that market. In the case of Natureza and the port, we already got the concession for building a port in the south of Brazil. This is also one of the steps that we have got during this process. We haven't started the procedure for building. Of course, the port is very well. This is very much connected with the decision of Natureza in general. In connection with the investment in that port, I cannot tell you exactly what is the amount right today, but it's something around. I would prefer not to, because there are some movements in the figures, but on the range of $250 million, the total cost of that. It could be a bit more.
This is part of the investment. It's part of the investment.
Perfect. Thank you. Thank you.
Thank you, Juraj, for your question. Now we have another question from the chat. Samuel Bevan from Aberdeen. What have your latest conversations been with Moody's around the risk of downgrade to high yield?
I will take that, Diego. Samuel, more than the conversation specifically with Moody's, as we have had said in the last quarters, we have, I would say, a lot of conversations with the three rating agencies we work with. Ultimately, what rating agencies look in a company is credibility and actionability. As we have mentioned in the past, we are aware that our net debt to EBITDA has been deviated from our target range. But even the last two announcements where we are showing, I would say, a very robust actionability, if you only consider the sale of the forest, our net debt to EBITDA should come down to our range. And if you add to that equation the sale of focus, we will be very much in the lower part of the range.
I would say that is very good news in the way we will delever the company in the coming quarters.
Thank you very much, Sebastián and Samuel, for your questions. We have no further questions in the chat, so I would like to thank you all. Thank you, Francisco, Sebastián, and Guilherme, and thank you all for joining.