Good morning, everyone, and welcome to Empresas Copec's First Quarter 2025 results conference call. Today's presentation and the First Quarter 2025 earnings release are available on the company's Investor Relations website: investors.empresascopec.co. Before we begin, I would like to remind you that this presentation may include market outlooks and forward-looking statements, which are based on the beliefs and assumptions of Empresas Copec's management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Empresas Copec and could cause results to differ materially from those expressed in such forward-looking statements.
This presentation contains certain performance measures that have been adjusted with respect to IFRS definitions such as EBITDA. In this opportunity, questions will be received in written form. If you have a question, please write it down in the Q&A section. Please be aware that your company's name should be visible for your question to be taken. I will now turn the call over to Mr. Rodrigo Huidobro, Chief Financial Officer of Empresas Copec. Please go ahead, sir.
Okay, hello everyone, and welcome to this conference call where we will be taking a look at the results for the First Quarter 2025 for Empresas Copec. Thanks for joining in. As usual, we will start the presentation with a review of the main figures and the main developments of the quarter, and at the end of the presentation, we will open it up for a Q&A session where I will be joined by Mr. Cristián Palacios, Director of Finance and Investor Relations at Empresas Copec, and Mr. Cristián Infante, who will be joining in from Europe in order to help us out with the questions you might have about Arauco. Mr. Cristián Infante is the CEO of Arauco, and Mr. Cristián Palacios is the Director of Finance and Investor Relations for Empresas Copec. Once again, thanks for joining in.
Let me start out by taking a look at the most important highlights for the quarter for Empresas Copec. We ended the quarter with an EBITDA of $774 million, which is up 20% Q on Q, and this is driven essentially by a very good performance in energy. In energy, we had higher volumes and also higher industrial margin at the Copec level, a sustained good performance of lubricants, especially at the Terpel level, and our steel continues to perform very well also with increasing volumes in all countries, together with the fact that for the first time the results of Gasib, the new company in Europe, in Spain and Portugal, for the first time those results were consolidated.
Regarding forestry, we had, as you all know, lower pulp prices when compared to one year ago, and in terms of the Q on Q comparison, we had lower pulp and wood products volumes. Regarding the main developments of the quarter, we had our shareholders' meeting where we announced the final figure for the CapEx estimated for this year. Together with that, Arauco formally began the construction of the Sucuriú project. In terms of ESG, we had a significant, very important sustainable bond issuance by Arauco. We had Empresas Copec leading once again the Merco ESG ranking for the third consecutive year, and Duragas in Ecuador becoming the first carbon neutral company in the LG sector in the country. Good news in general. Main figures for the quarter are shown on screen there.
We ended up sales with an increase of 7% Q on Q and 1.8% year on year. EBITDA, as we said before, plus 20% Q on Q with a drop of 8% year on year. Debt to EBITDA standing at 2.78, which is up with respect to the previous quarter but down with respect to the beginning of 2024 and still a very reasonable level. The CapEx for the quarter amounted to $406 million, basically concentrated with forestry for the obvious reasons that we already started the Sucuriú project. 85% for forestry and 15% for the energy sector. We have the EBITDA by division that you can see there, especially noteworthy, as I said before, Copec and Abastible with very significant increases over the comparable quarters.
The evolution of EBITDA and net income is shown on screen there, 774, which is quite in line with the second and third quarter last year, above the fourth quarter and below the first quarter of 2024. You can see in this evolution here that we have reported EBITDAs of around or above $1 billion when we are facing good pricing scenarios for pulp. EBITDA goes down to somewhere around $600 million when we see weak scenarios for pulp, and this time we're somewhere in between. So $800 million approximately for the quarter. It's sort of a mid-cycle figure for this quarter. Net income amounts to $208 million for the first quarter 2025. There are some financial numbers and ratios on screen there. You can see an interesting level and very healthy level of cash with $2.3 billion.
A very well-distributed maturities for the debt going forward, very balanced maturities for the debt. You can see the evolution of net debt to EBITDA, where we're standing at 2.78. Well-diversified channels for the debt. We have bonds and we have bank debt as well, and also HFR subsidiaries with a healthy financial situation. In terms of financial ratios, we are in line with the preceding quarters, standing at around 11% EBITDA margin and around 9.5-10% for return on capital employed. Let me move into some more detail for the forestry division now. Arauco ended the quarter with an EBITDA of $365 million, which compares with $471 for the first quarter 2024. This is essentially driven by lower pulp prices. As you well know, we had prices going down by the end of last year, and that situation persisted during the beginning of this year.
We'll get into more detail on that going forward. Together with that, decreased wood products volumes, and all of that offset to some extent by a good behavior in terms of costs for the different fibers. Also, Arauco recorded some one-time non-recurrent non-operating factors during the quarter, so we end up with a net income of minus $26 million. Some more detail on pulp shown on screen. You can see that the EBITDA for pulp during the first quarter was $252 million. This is the EBITDA as calculated by Arauco, compared and very much in line with the fourth quarter 2024, but of course, quite significantly below the $360 million that we saw in the first quarter 2024 when we still were facing an attractive pricing scenario. You can see that prices are down 11% with respect to first quarter 2024.
They are very stable Q on Q and volumes the other way around, basically very stable year on year and a drop Q on Q having to do with some maintenances that we had during the quarter. Also with the fact that in the fourth quarter last year, we had some extraordinary volumes coming from the fact that there was some catching up to be made after we had had some disruptions in the ports during the third quarter last year. We had some extraordinary volumes both in pulp and woods during the last quarter last year. A good behavior, as you can see there on a fiber by fiber basis, almost for all fibers, a good behavior in terms of costs with a healthy evolution in terms of costs. You can see some elements of the pulp markets for the first quarter there.
Inventories are at a healthy level, pretty much in line with historical levels for both fibers. In general, this was a quarter that began very well with good levels of prices and price increases. Actually, we managed to go ahead with some price increases, but towards the end of the quarter, we saw basically clients becoming very cautious on the back of the trade wars and therefore some uncertainty that hit prices towards the end of the quarter. Exactly the same behavior in the different markets we saw. In China, we saw some positive demand during the beginning of the quarter.
We were able, as I said, to go through with some price increases, but towards the end of the quarter, a lot of uncertainty, a lot of caution from local paper producers who basically preferred to buy from local providers, local suppliers, rather than entering into agreements of several months with international suppliers. Same pattern in Europe. The quarter started off very well. Price increases materialized, but a lot of caution towards the end of the quarter. In the case of dissolving pulp, we had entered the period of negative seasonality, and you can see, and you will see later on that prices have been affected by that. Actually, on screen now, we have on the bottom left corner of the screen, we have the net prices for Arauco in China, and you can see that we reached a maximum after implementing several price hikes during the quarter.
We reached a maximum of $610 for hardwood, and that came down to $560 at the end of the quarter. Softwood continues to be way above hardwood in terms of prices, with a maximum of $825 going down to $770 by the end of the quarter. In terms of dissolving pulp, we had seen a lot of stability during several quarters already, and we saw a drop to $910 towards the end of the quarter because of this seasonality. Some more elements are shown there. Chinese New Year in general was stable and with demand better than expected until we had this uncertainty that came into the market following the tariff announcements. In Europe, exactly the same thing. Good trend at the beginning of the quarter. Towards the end of the quarter, the pricing hikes were more difficult to implement.
In general, it has been an environment so far of concerns and uncertainties surrounding the tariff issue, and given the announcements, the last announcements, we have to see what happens next regarding this tariff issue. The wood products market EBITDA was $118 million for the quarter, which is pretty much in line, a little bit up regarding the first quarter 2024, a little bit down regarding the fourth quarter 2024, on the back essentially of lower volumes. As I said before, we had some exceptional volumes in the fourth quarter last year, and in general, we had seen an environment of stability in panels. Lower volumes, prices have been very stable, as you can see in the tables which are shown there. In terms of the main developments and the outlooks for the different markets, we're showing North America, our most important market on screen now.
53% of sales are going to North America, where we are seeing an MDF market that remains quite challenging with demand going a bit down and downward price pressures as well. The market for particle board could be expected to remain stable. We have seen stability, balanced supply, steady demand, and still waiting to see what happens with the tariffs, which could eventually even support some price increases in the local market in the U.S. particularly. In terms of remanufactured products, the year has been challenging. We have seen decreases in demand, lower prices in general, driven essentially by low construction activity and some oversupply. Stability in the plywood markets in general and some reduced supply may be expected going forward. For our second most important geographical area, which is South and Central America, we have seen stability in Brazil, Chile, stability as well, but not a very good performance.
We have not seen any substantial improvement in Chile because of a depressed construction sector essentially. Argentina continues to make progress, and actually we had an interesting surprise there because of a reduced impact of lower economic activity. Finally, Asia continues to be challenging for woods and panels, weak demand in general in China. Australia, stability in general, and good news coming from Europe where we have seen a positive trend, and we would expect this to continue driven by lower interest rates together with some competitor mill closures and also a very interesting and increased interest for sustainable construction, which could become a major driver of different markets worldwide going forward. A positive trend in supply, but in general uncertainty in the Middle East. That is it for the forestry sector, and then moving on to energy.
We had a very good quarter for Copec with an increased EBITDA in Chile. We came up to CLP 309 billion for Copec compared to a figure that was already very good in the first quarter 2024, CLP 292 billion. This tends to be a seasonal element in the first quarter of each year. Normally, this is a very strong quarter having to do with the holidays in Chile essentially, but this quarter was especially good having to do with a favorable industrial margin together with higher volumes, and all of that offset to a certain extent by an unfavorable inventory revaluation effect. As you can see there, we had an interesting growth in both channels. Gas station volumes up by 3.5% year on year, very healthy in spite of increased competition in the local market.
We continue to have a solid competitive position with good locations, with good logistics, efficiencies of scale, and also a very strong customer preference as usual. In the industrial channel, we had a very significant increase of 9.8% year on year, which has to do essentially with a good performance of the mining sector and also probably non-recurrent very good performance of the power generation sector as well. For Terpel, we also had a good quarter. The performance of Terpel over the last two quarters has been sustained at very good levels. As you can see there for the last two years almost, we have had very good levels, sustained good EBITDA generation. This time we recorded COP 425 billion, which is a very good level of EBITDA generation in spite of it being a little bit low the first quarter 2025.
This is driven essentially by higher volumes on the positive side and also a sustained good performance in lubricants. The lubricant segment has been gaining traction since we acquired years ago. We acquired the assets from ExxonMobil so as to become the sole distributor of the ExxonMobil products in Chile, Colombia, Peru, and Ecuador, and this has been consistently gaining strength. We've seen a very good performance of this segment over the last few quarters. The volumes are better on the consolidated level, very good performance in Colombia, but some difficulties in the Dominican Republic because of some change in the patterns of aviation traffic in that margin on which we are already working. Abastible also had a strong quarter, as shown on screen there. We ended the quarter with CLP 63 billion of EBITDA compared to CLP 41 billion.
In this particular case, we had a very good increase in volumes all across the board in all different geographies where we take place. Together with that, and very importantly, we had for the first time in terms of income statement, the consolidation of the new company that has been acquired in Europe, particularly in Spain and Portugal. Gasib, our new company, the results of Gasib are for the first time being consolidated in the Abastible figures. Operationally speaking, you can see there that all across the board in the Latin American countries where Abastible operates, we had quite an interesting increase in volumes, 8.4% in Colombia, 7.6% in Ecuador, 15.8% in Peru, and 3.1% in Chile.
Healthy increases in volumes all around, and this has to do essentially with a very good performance of the pulp segment, which is essentially targeting industrial companies to whom there's a new offer of Abastible. It's a complete energy offering, including not only liquid gas, but also some more sustainable and renewable energies, which has had very successful acceptance in the market. That has been a major driver of our performance in the industrial sector, in the pulp sector. A special mention, as I said before, to Spain and Portugal, where we began operating Gasib at the end of last year and we're consolidating the figures for the first time this quarter. We achieved an interesting EBITDA of EUR 19 million for the quarter, which is above our initial expectations.
The bottle segment performed very well, basically due to a colder climate and also colder weather and also a very interesting tourism activity. Together with that, we saw increased volumes and margins in the pulp segment and market share gradually increasing this time from 13.6% to 13.8% year on year. All in all, we are very positive about this acquisition. Financially speaking, it was an attractive acquisition at a very interesting acquisition multiple. More than that, we see a lot of room for synergies and for transferring best practices in both directions, both from Europe to Latin America and also the other way around, and also to be exposed to a market that is culturally very similar to Latin America, which is several years ahead in terms of its evolution in terms of energy transition.
A lot of learning to be done there and a lot of practices to be transferred from Europe to Latin America. We were able to confirm that during the first few months of operation of Gasib. Let's move on to our other investment segment. We had a good performance by Sonacol, our pipelining company. We had an increased net income stemming from an increase in volumes that were pipelined during the quarter. Icheman, which is our fishing division, has seen a good scenario in terms of catches, but a more challenging scenario in terms of pricing of its main products, and therefore it has recorded a loss for the quarter. MetroGas had a one-time effect stemming from the fact that it reached an agreement in a long-dated judicial problem that it had with a provider, with a supplier in Argentina dating back from 2009.
This judicial issue finally came to an agreement with MetroGas having to pay $100 million to its suppliers in Argentina, which is less than the provision that had been made. There was this mispayment of the provision, which turned out to generate a one-time effect of approximately $20 million for MetroGas as a whole and 40% of that for Empresas Copec. Together with that, Ajesa, which is the trading division for natural gas, wholesale trading division, recorded a better net income than last year on the back of a good operational performance. Good numbers in general for Mina Justa, Cumbres Andinas. We had an increased EBITDA year on year coming from an increase in volume sold, a very good pricing scenario, as we all know. Pricing in general for copper has been very strong over the last few quarters.
Together with that, lower cash costs, which stem from the fact that we are mining a very efficient portion of the mine with low cash costs and high grades, and also with a lot of byproducts present also in that particular segment of the mine, a lot of silver in particular coming from that segment of the mine and contributing as credits into our cash cost figure. We should be gradually trending towards an average cash cost for the year of $1.4-$1.5 for the year as a whole. This $1.3 figure is not necessarily recurrent for the quarters to come. Anyhow, a very good performance by Mina Justa. Finally, moving on to the highlights and the main developments of the quarter.
First of all, we had our shareholders meeting where we confirmed what we had initially announced for the CapEx plan for this year with a more precise figure of $3 billion and $14 million, of which approximately 80% goes to the forestry sector and 19% goes to the energy sector. Once again, the focus is going to be in these two main divisions and 1.7% for other investments. Of those $3 billion, approximately half goes to Sucuriú for the industrial portion of Sucuriú. Together with that, we have a maintenance component which will range between $900 million and $1 billion for the year.
Besides that, for completing the over $3 billion figure, we have several projects including some plantations acquisitions, plus the panel and woods projects that we are carrying forward in Mexico and in Chile, plus some energy transition initiatives, plus a lot of efficiency projects that have been designed for different industrial activities across the different segments. All in all, a figure of $3 billion for the CapEx for the year. Arauco officially launched the construction of the Sucuriú project with the main contractor, Valmet, going ahead with the installation of its personnel and equipment in the site. The first stone ceremony was carried forward on April the 9th with the presence of top executives from Arauco and also Brazilian state and federal authorities, including the acting president at that point in time. A very good launching of the project with this ceremony.
Together with that, as of the end of April, we have reached a physical progress of 5.2% and total disbursements of $341 million. Regarding the main activities there, the piling works have already started on the boilers, the fiber line, and the drying machine. We already have more than 3,000 workers on site. Everything going according to what has been programmed for the Sucuriú project. In terms of ESG, Arauco went ahead with a very interesting issue of a sustainable bond for $500 million in the international markets. Strong investor interest for the operation, which was reflected in a total demand of several times the amount offered, more than four times the amount offered. An important part of these funds will be used for the Sucuriú project together with eventually some repayment of existing debt and general corporate purposes.
Going on with ESG news, we had Duragas, also a subsidiary company in Ecuador, becoming the first company in the liquid gas sector in that country to achieve carbon neutrality. Very good development there in Ecuador for Duragas, a subsidiary company, liquid gas. Finally, we had Empresas Copec leading for the third consecutive year the corporate holding category for the Merco ESG ranking with its leadership in environmental, social, and corporate governance matters highlighted in the results of the ranking. Also very interesting news there regarding our position in the ESG issues. With that, that is what we had prepared for you for today. We will open up the Q&A session.
We will have Cristián Palacios, Director of Finance and Investor Relations of Empresas Copec, whom you all know, of course, joining in today, and also Cristián Infante, CEO of Arauco, who will join in from Europe through the Zoom platform in order to help us out with the questions you might have on the forestry division. Cristián, please, you can come in. Thank you.
Thank you. We will start now the Q&A session. If you have a question, please write it down in the Q&A section. Please remember that your name and company should be visible for your question to be taken. Thank you.
We are all set for the Q&A session. We have been joined in person by Cristián Palacios and also Mr. Marcelo Bennett, Corporate Treasurer of Arauco, and Cristián Infante, who has joined in from Europe.
Thank you all for helping us in this Q&A session. Please, Cristián, you can go ahead with the questions.
Okay, thank you, Rodrigo. We have some questions in forestry, so we are going to start with Cristián. I have Matheus Moreira at Bradesco BBI. Arauco was the first major Latin producer to announce price cuts in China, establishing prices at $560 per ton in May. I was wondering if you could give some color on how the acceptance of this level of prices has been. In addition, if you can comment on how you are seeing downstream paper demand across both China and Europe? Do you expect any restocking activity to take place in the near term?
Thank you. First of all, hello to everybody. Yes, thank you for the question. Yes, we announced a price of $560 for our short fiber, our eucalyptus fiber in China.
That price was well accepted. We sold all our volumes. In fact, I would say that we have today, our inventories are quite low. We do not have much volume to sell during May. As you can see, for $5.60, it was a successful price drop. That gives us a very comfortable situation on what is happening in the market. What is happening really today is that everybody knows there is a lot of uncertainty. Most of our customers really do not know, the ones that export, especially to the U.S., what the price of their goods is going to be. They are trying to buy as little as possible. We know the way the Chinese market works. When Chinese customers feel that the prices are close to the bottom, they will start restocking. When that will be? That is a very good question.
I think we had some very good news today regarding the tariff talks between the U.S. and China. That immediately made the futures market jump up 200 RMB in one session. That is a very good sign of what will happen. That might trigger sooner than later some restocking from the Chinese. Of course, that is something we do not know. If you ask also about demand, we see demand in Europe right now. All customers are pretty much satisfied with the Q1 results. We see some pretty positive flow coming from our European customers. In China, customers are more cautious because, of course, there is more capacity as well. When you talk to them, they tell you that local demand is pretty good. Of course, if the uncertainties are lifted after this tariff negotiation, I think we could have some pretty solid market coming downstream.
That, of course, is a story that is developing, and it's very difficult to say how that's going to end.
Okay. Regarding the Sucuriú project, could you share your expectations for the forestry CapEx? How much land do you still need to buy?
Okay. Today, the land available, I wouldn't say buy because most of the land we have is we have some local partners for the land. Today, we have available for Arauco 270,000 hectares of about the 400,000 hectares we need. We're very much on track. Our plantation is going very well. We should be planting between 65,000-70,000 hectares during the year. That's been going very well. It's very much mechanized. An important part of our plantations are mechanized. They are also getting very good results.
Of course, the beauty of this project is that the forest base we're building is very close to the mill. That, of course, will give us very efficient logistics.
Okay, thank you, Cristián. Rodrigo, the fuel division was the main positive highlight of the quarter with solid volumes and margin performance. Could you share what you expect in terms of results for the division across your key segments in the coming quarters, please?
Thank you. It was, in effect, a very good quarter for the energy division as a whole. This is a division that, on the base case, grows pretty much in line with the economy and with very stable margins that are basically adjusted by inflation from one quarter to the other. This is a division that has consistently recorded a yearly EBITDA of around $1 billion-$1.2 billion over the last few years.
The performance has been very robust, even though we're facing increased competition basically across all segments. The base case is to expect to continue growing in line with the economy, with stable margins. With some elements of volatility, though, you can see that the industrial segment performed very well this quarter. That had to do with exceptionally high volume coming from the power generation sector and also from the mining sectors. Every now and then, we do have some elements that lend some more volatility to this segment. All in all, we should expect the performance to be in line with what we have been recording lately, with, of course, this potential volatility in some components of the margin and of the volumes.
Thank you, Rodrigo. I have Judy Bereyra Santander. This is a question in mining.
What's the current status of Mina Justa's ramp-up and operational reliability? What are the next steps for exploration at this asset? Are there any plans to increase your copper mining exposure? Could you detail the average cash cost performance versus initial estimates?
Yeah, operationally speaking, the mine is doing great. We've had a smooth performance and a very good EBITDA generation. As we've informed before, we've been working on the Mina Justa project. This should be our first expansion. The Mina Justa underground project is a project where we have been making progress. We have actually gone from the pre-feasibility stage to the feasibility stage. The reserves corresponding to these new projects have been formally added to the total stocks of reserves of Mina Justa. Permits are being processed and are on track. Engineering studies continue to make progress. Financing is being analyzed.
We have made some progress for Mina Justa underground. The idea is to have more information so as to be able to formally approve the best possible project. As of the information we have now, Mina Justa Subterránea should add 500,000 tons of reserves, which means an additional four to five years of operation. It should help to smooth out production as from 2028 going forward. The total CapEx should be pretty much within the ranges that we have announced previously, which is between $400 million and $500 million.
Thank you, Rodrigo. We're going to go back to Cristián. I have Emerson Vieira at Goldman Sachs with some questions in forestry. The first one is on Sucuriú. The company just issued a bond internationally. He would like to know if you are considering other alternatives or options to finance the project. That's one.
What would be the ideal mix between internal cash flows and internal injection from potential partners? Three, the company has been seeking for a partner to develop the infrastructure of the project, let's say the railway and the port, for instance. What's the estimated CapEx for this potential infrastructure?
Okay. First of all, regarding the debt, yes, we are working on increasing our debt, the financing. We're working with the credit export facilities and with multilateral loans. We're pretty much ahead with that. That, of course, should give us a lot of resources for the project. That added to the $1.2 billion capital injection that we will have throughout the time from Empresas Copec gives us a very, we have the project, the financing of the project very well on track. Now, regarding the logistics, yes, we are looking for partners. It's an option we're taking.
We have not decided if we are going to do it ourselves or we are doing it with a partner. That process is still ongoing. If we have attractive alternatives to do it with a partner, it is a way we would very much like to follow.
Okay, another one for Cristián. The company has announced a $50 discount in hardwood by the end of Q1, but sales did not respond accordingly, and there was some inventory built up in the quarter. Do you think that further discounts are needed for the second quarter this year? If so, what should be the magnitude of these potential extra discounts?
Okay. Yes, in fact, as I mentioned before, we did announce from $610, we went to $560 in the Chinese market. As I said, the reception of that price was very good.
We have very low inventories at this point in time. We are in a very comfortable position to negotiate prices now in May. That said, I think the market, there has been more erosion for May. We might see some slight decreases in the price. I do not think the magnitude of 50, it will definitely be lower than that. I think we could have some further price depreciation coming in May. As I said, the market is pretty solid. I think what is important is to remember that Arauco produces several fibers. We produce long fiber. We produce unbleached pulp, long fiber as well. We produce the solvent. Each market has its own dynamics. When you look at the long fiber, it is much tighter. Prices are a lot higher than short fiber.
When you see the gap we have between long fiber and short fiber, it's quite important today. Prices have not had that type of erosion. They have corrected themselves a little for long fiber. They have corrected themselves a little for unbleached, but not as much as they have for eucalyptus. All in all, yes, we have seen price erosion, but the effect has been softer when you look at the complete range of products that we have.
Cristian, on your other main division, wood products, and especially in the U.S., how do you see demand and competitive environment as of April and for the remainder of the year?
When you look at housing starts in the U.S., which is something we follow very closely, the housing starts have been pretty flat or a little bit on the downward trend lately.
We're facing, we have mills in the U.S. We have mills in Canada. We have mills in Mexico and in Latin America as well. Really, they also source the U.S. market. Really, it's a mixture of what has been happening. With all the tariff issues, there's been a lot of noise of what's going to happen with prices going into the U.S. Today, we have a 10% tariff when we import into the U.S. Of course, that has boosted pretty much our local production. We see the particle board market in the U.S. pretty much balanced. We see the MDF a little bit softer. All in all, when we look at our products, you look at Q1, the EBITDA for Q1 of Arauco was slightly better than Q1 of last year. It's a pretty balanced market. I wouldn't say it's booming.
It'll depend basically on what happens with housing starts and all this volatility that we've seen due to the tariff issue, as I think, affected the market. For the time being, I see it quite stable for us. I don't see much downward pressure. There has been some increase in our cost due to the increase of prices of methanol and urea, which are the elements used for resin when producing panels. I think those price increases have already been taken care of. We're with pretty solid production in all our mills.
Going back to Paul, González González at West Capital would like to know if you have heard about capacity shutdowns in the market during the last couple of months.
I have heard of some producers that have announced market downtime. I don't have any official information from them.
It's more from a rumors point of view. I know there's a large producer that reduced 300,000 tons of production. I know other mills have also done similar things. With this price level, there are many, especially in the northern hemisphere, many producers begin to struggle to cover their cash costs. I wouldn't be surprised if we see more downtime being taken. Officially, I can't comment because I'm not certain of that information.
Thank you, Cristián. Rodrigo Jara Alfonso Salazar at Scotiabank. At the company's port level, is there any independent way to allocate capital across all divisions? Or growth of one business unit is financed through free capital generated from other business units? How does this work in the case of Copec also? Have the expected returns to approved investments increased during the ongoing macro uncertainty?
Yes, we're committed to generating long-term shareholder value. As part of that process, we do have, of course, a process for allocating capital and approving projects at the different levels. It is usually the case that the different projects are approved at the subsidiary level division, and that's a process that corresponds to each board of each subsidiary company. Whenever that is not the case and there are opportunities that require additional funding or capital injections for the different subsidiaries, yes, we do go to the parent company and we hold a strategic cash pool at the parent company, which is aimed towards facilitating the fact that subsidiaries can tackle the opportunities that they see in the market and also supporting them whenever they face tough market conditions.
Those decisions are, of course, taken on an NPV basis, NPV that is calculated on the basis of discount rates that are permanently reviewed, that are dynamic, and that are different depending on the division and on the country that we are evaluating. That is, in a nutshell, the process which we use for capital allocation.
I have Maria Teresa Ruvilar at IDAU. Is there some news regarding the sale of non-core assets?
Not really. This is a permanent process. We are permanently reviewing our portfolio of assets. We are looking for opportunities where eventually assets may be worth more in the hands of third parties rather than holding them in our portfolio. We have been very active in this over the last few years.
You have seen that we have sold assets such as MAPCO or the forest to sale that we made in Brazil last year, Gasmar, and many others. We believe that there is a way of transparent value and therefore generating value and also strengthening our balance sheet. We have made public the case of Sonacol that is actually classified in our balance sheet as available for sale. In that particular case, we had some differences with our partners regarding how the sales process should proceed. We have been working that out. Therefore, this is a process that should regain traction going forward. In the case of MetroGas, we have also announced the intention to look at the possibility of selling that, but are also waiting for the best moments.
Actually, the fact that the judicial process that MetroGas held in Argentina was finally solved is very good news regarding that process.
Okay. We do not have more questions at this point. We would like to thank Cristián over there in Europe, Marcelo and Rodrigo here in the room. Thank you, everyone, for attending this call. We will be reviewing second quarter results in some part in August. Thank you, everyone, and have a good afternoon.
Thank you.
Bye-bye. Thank you. This does conclude today's presentation. You may disconnect now and have a nice day.