Good morning, everyone, and welcome to Empresas Copec's third quarter 2025 results conference call. Today's presentation and the third quarter 2025 earnings release are available on the company's investor relations website, investors.empresascopec.cl. 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.
Hello, everyone. Thank you for joining us today in this webcast where we will be reviewing the results corresponding to third quarter 2025 for Empresas Copec. I'm going to start by flipping through a presentation that we have prepared for you with the main figures and highlights of the quarter. I will be joined by Mr. Cristián Palacios , Mr. Marcelo Bennett, and Mr. Gianfranco Truffello for the Q&A session. They will all be helping us out in addressing any questions you might have after the presentation in the Q&A session. Having said all that, let me begin by showing you the most important highlights of the quarter. This is a quarter, as you can see on the screen there. This is a quarter where we recorded an EBITDA of $642 million, which is a 15.9% drop year- on- year.
That is driven essentially by a lower performance in forestry, offset to some extent by very good results that continue to happen in our energy division. As pertaining to energy, you can see that both Copec and Abastible continue to show a sustained good performance. In the case of Copec, we have higher volumes, very good industrial margin, and also continued good contribution from the lubricants segment. In the case of Abastible, the company continues to perform very well, essentially with higher volumes across all geographical regions, particularly in Colombia, Peru, and Ecuador in the case of the year-on-year comparison. Regarding forestry, we, as you well know, are going through a scenario of low pulp prices, and therefore the drop in EBITDA is driven essentially by lower pulp prices, partially offset by higher volumes in the pulp division.
In terms of the main developments of the quarter, we continue to make progress in the Sucuriú project already at 25.7%. We have begun works at the Mina Justa Subterránea project. Those were starting in October. Also, Arauco has made significant progress in terms of its financing for the Sucuriú project , as you will see further on. Regarding ESG, also very significant developments here. We were validated by Sustainable Fitch in terms of the allocation and impact of the green bond that Empresas Copec issued last year. Together with that, we continue to make progress in solar panels with one of the largest parking lots in the country with solar panels, and also with the fact that a northern city in Chile became the first city in South America to have electric transport, fully electric public transport sourced by Copec.
Very good news also regarding our progress in electromobility. Main figures for the quarter are shown on screen there. EBITDA is down 15% year- on- year and 9.8% QoQ. Sales are going up. Our debt-to-EBITDA ratio has gone up, in line, of course, with the CapEx devoted to Sucuriú. As you can see there, the CapEx for the quarter was $1 billion approximately, most of that concentrated in the forestry division, precisely because of the progress in the Sucuriú project. Pulp EBITDA is down, as we will see further on, driven by lower pulp prices. Wood products EBITDA is down a bit with respect to year- on- year and also QoQ, but still in line with the historical averages.
In the case of Copec and Abastible, a very good performance for both companies, with an increase year on- year of almost 19% in the case of Copec and 14% in the case of Abastible. Finally, Mina Justa performing very well with an EBITDA of $236 million, which is up 35% yearly. Very good performance by Mina Justa. You can see the historical evolution there, an EBITDA of $642 million, a little bit below what we have usually indicated as our mid-cycle historical EBITDA. Mid-cycle is around $3 billion per year. This is a little bit below that when measured on a quarterly basis, precisely because we are going through a scenario of lower than historical pulp prices. In the case of net income, $198 million, which is a little bit below the comparable quarters, but also pretty much in line with the last few quarters when adjusted by one-time effects.
You can see a very brief outline there of our debt and our debt metrics and also profitability metrics. Our maturities are well distributed. Going forward, we have a good level of cash with $2.7 billion. Our net debt-to-EBITDA continues to trend up, of course, as expected because of the evolution of the Sucuri project and the amount that has been devoted to the CapEx through the Sucuriú project. So $3.2 billion or $3.3 billion at the end of the quarter, which is still pretty much in line with what we have permitted in our financial policy. Arauco continues to concentrate the largest part of the debt, also because of the progress in the Sucuriú project. Very well distributed by type of debt, which means that all of our debt channels are open, which is a good thing to have.
Financial ratios are down a bit, both in terms of EBITDA margin and return on capital employed because of the lower pulp price scenario that we are facing and going through. Diving deeper into the different business divisions, let us start by showing a little bit more detail on forestry. As you can see there, Arauco has a decreased EBITDA with respect to the third quarter 2024, so $296 million EBITDA compared to $463 million. Net income is also down, basically null for this quarter compared to $231 million for the third quarter 2024. All of that is driven by lower pulp prices and also lower wood products volumes. There was also a large forestry asset sale in third quarter 2024, which brought about a significant net income effect.
All of that is partly offset by increased pulp volumes, higher panels, and some timber prices, and also lower unit selling costs, basically across the board for the different pulp types. Diving deeper into the pulp division, we recorded an EBITDA of $193 million as measured and declared by Arauco, which compares favorably, of course, with both the immediately preceding quarter and the comparable quarter last year. Costs are down across the board, as I said before, for the comparable quarter last year for the different fibers. Also down for softwood, QoQ, offset by increases for dissolving, bleached, and unbleached softwood. In the case of volumes, we have seen volumes going up by 8.5% year- on- year and 9.8% QoQ, so interesting volume growth.
In terms of prices, of course, we are down with respect to the third quarter 2024, but we are already up with respect to the immediately preceding quarter. As we'll see later on, we're beginning to see a gradual increase in prices we'll begin to see at the end of the quarter, actually. A review of the pulp market during the third quarter 2025. As I said before, we are going through a low pulp price scenario, but towards the end of the quarter, we saw prices rebounding gradually, especially in hardwood. Softwood prices have continued to decrease throughout the quarter. China, which is our most important market, we continue to see a stable demand. However, we are seeing an oversupply situation, particularly with printing and writing for the printing and writing industry, and that has put pressure on the price recovery. The tissue industry, meanwhile, has remained stable.
In Europe, we are seeing some slight recovery in demand, particularly in hardwood, and we saw also a price recovery in hardwood towards the end of the quarter, which moved and pushed some clients to ensure to secure the volumes by the end of the quarter. The printing and writing industry, however, remained challenged throughout the quarter. In terms of dissolving pulp, we are seeing oversupply in the viscose market, but stability in general in the textile pulp market. As I said before, in China, we're seeing stable demand, but oversupply in the different markets driven essentially by a local producer that had added additional capacity and therefore additional pressure to the market. We are seeing a gradually upward trajectory for hardwood prices, but no clear signals of recovery for softwood prices yet. Inventories have remained stable.
The European situation is still a weak situation with no signals of a clear recovery so far. The tissue industry and the printing and writing are probably going to continue at their current levels for a while. We continue to see uncertainty triggered by trade wars and the tariff situation also all across the different geographies. As you can see there, particularly in the bottom left-hand graph, we can see a slight recovery in pulp prices, especially in hardwood during the quarter, and also stability in the dissolving pulp prices. In what relates to wood products, we saw an EBITDA that is down QoQ and year on year, $118 million. However, pretty much in line with the historical levels that correspond to an EBITDA of anywhere between $500 million-$550 million or $600 million, but still in line with that. Different situation for the different products there.
We can see some recovery in volumes for panels, particularly QoQ, and also prices rebounding a little bit QoQ for solid wood. For the different geographies, we are showing some insights there on the screen. North American market is the most important market for all wood products. We see a different situation for the different products that we sell there. MDF, PB, and also remanufactured products in general face a challenging situation with some oversupply in the case of MDF, some low demand in the case of particle board, and also a low demand in the case of remanufactured products. However, in the case of plywood, we see a better situation with stability, limited supply, and therefore a good support for prices. The situation is somewhat different for our Latin American markets, as you can see on the screen there. Those markets represent 42% of our sales.
As you can see there, in the case of Brazil, we have seen a robust situation, a strong market, a solid market, a strong particle board demand, and also a good situation, well balanced for MDF. In the case of Chile, mixed scenarios with some products doing well and some others facing a weaker situation. In the case of PB and melamine, strong demand. However, relative weakness in the case of MDF. Argentina is also a very important market for ourselves, and we continue to see a good outlook with stability and strong local demand. Let me move on to the energy division now. A good quarter for the energy division. We continue to see a good performance for Copec. Copec consolidated statement is shown on screen there in Chilean pesos, which is the functional currency for this division.
The EBITDA recorded for this quarter is CLP 254 billion. Very good performance when compared on a year-on-year basis. Very stable on a quarter-on-quarter basis, but the company performing at a very good level. On the back of higher volumes in Chile in general, a favorable inventory revaluation effect. This is an effect that led some volatility to this company and to this segment. In this case, we had a favorable effect. Also helped by a higher industrial margin, the industrial division has performed very well during the last few quarters. Also a sustained good performance in lubricants for the different geographies, not only in Chile, but also for the other countries in which we operate. Volumes for Chile are shown on screen there. Stable volumes for gas stations, slightly increasing, very slightly year on year.
However, a very good performance for the industrial channel with a very strong growth of almost 14% year- on- year. Terpel had also a very good quarter. You can see the income statement there, the summarized income statement shown in Colombian pesos. EBITDA is up to almost CLP 480 billion, which compares very well both with the secon quarter 2025 and also with third quarter 2024. Also a very good performance in terms of net income. Volumes grew in the different geographies very strongly in some cases. In the case of Colombia and Peru, very strongly. Offset to some extent with a drop in the Dominican Republic because of the ceasing of operations of some airlines that used to be our clients. As I said before, also in this case, there's a good support from the performance of the lubricants division.
Let me remind you that some years ago, we acquired the lubricants operations from ExxonMobil for Peru, Colombia, and Ecuador. That operation is yielding very good results already and is a very significant element for explaining this very good lubricants performance. Abastible has also been performing very well during this year. You can see that the EBITDA there amounts to CLP 69 billion compared to CLP 60 billion for the comparable quarter last year. In this case, we have the consolidation for the first year in 2025 of the recently acquired operation in Spain and Portugal. Together with that, we have seen a very good commercial performance in the different geographies where Abastible operates. Particularly strong volume growth in Colombia, Peru, and Ecuador. All of that is offset by higher taxes when you get to the net income line.
These are higher taxes that are basically explained by the appreciation of the local currency rates. Some words on the performance of the different markets. You can see that volumes basically grow across the different geographies, particularly in the bulk segment where we have been very active in substituting other sources of fuels and other sources of energies. Also driven, in the particular case of Peru, to a large extent by the poultry industry, which is a very large industry in that country. In the case of the bottled segment, in general, we have seen growth with the exception of Chile, where we had higher temperatures. The market shares are standing at very healthy levels, in general, increasing a bit or remaining stable with respect to last year, and ranging between 25% for Peru and 40% for Ecuador. Very healthy market shares in general.
Also, the good situation persists in Abastible, our newly acquired company in Spain and Portugal, with stable volumes and also a particularly good performance of the bulk segment once again, with a very good activity of substituting other sources of energy. Moving to the other divisions of the company, the most important of them, of course, is our Mina Justa mine, which is recorded through a company called Cumbres Andinas. The EBITDA recorded for this quarter is $236 million. Very good figure for the year and comparing very well also with the third 2024, when the figure was $175 million. In line with that, net income for the quarter is $137 million, so very strong net income for the quarter as well. This has been driven by increasing volumes, strong physical sales, also a very favorable cost level driven by good grades and the presence of byproducts, a very strong presence of byproducts.
Of course, helped a lot by the very good copper price scenario. In the case of the other smaller divisions, we have good results at Sonacol. Sonacol has been increasing its results in line with better activity in the fuel segment. The fishing division in Igemar, with a loss of $11 million for the quarter, in line with lower prices and higher costs. A very good performance for MetroGas and Agesa, our natural gas divisions, in line, in the case of MetroGas, with last year, and in the case of Agesa, with a decrease because of a very high comparison base in 2024. Anyhow, a very good performance for those natural gas divisions. Moving on to the main developments of the quarter, the update on the Sucuriú project is shown on screen there.
We continue to make good progress in line and a little bit above what we had expected and we had planned. Physical progress is up to 25.7% as of September. We began the works in terms of mechanical erection, also in terms of pipe racks and boiler steel structures. We have started construction in the turbo generators buildings, the cooling tower, and administrative facilities. The CapEx deployed so far on an accumulated basis is a little bit above $1 billion disbursed as of this date, in line with the physical progress that we mentioned above. Also, a very important piece of news regarding the Sucuriú project is the fact that Arauco has basically secured the financing for the Sucuriú project. This was done with two different debt instruments.
One is an AP loan where IDB Invest and IFC led the process and also the participation of eight different commercial banks. Together with that, Arauco closed an ECA facility for almost $1 billion as well, which is guaranteed by the Finnish agency, Finvira. All of the above in very good tenors and very good rate conditions. This is not only very good financing conditions, but also the fact that the participation of ECAs and the multilateral agencies secure a very good support for ensuring a good level of best practices in terms of climate, social, and value chain effects. Also, in line with the former news, Arauco also issued a large bond in the Chilean market, in the local Chilean market. This is actually the largest bond issuance in the history of the Chilean financial market. It amounted to CLF 20 million .
The UF is the currency, the inflation-adjusted local currency, and that is equivalent to approximately $850 million. This is a sustainable hybrid bond. The conditions were 1.7x the total demand was 1.7x the amount offered. The rate, as a result of that, was a very attractive rate, UF plus 3.97%, which is a spread of 168 basis points and is equivalent to approximately $6% at the current swap conditions. This is a hybrid bond, which means that it is subordinated to the senior debt and also allows the deferral of interest payments at the company's discretion. As a result of that, rating agencies rated as 50% debt and 50% equity, which of course contributes to improving the credit metrics of the company. The total maturity is 32 years, which is a good show of long-term confidence in our subsidiary company.
Very good, very attractive placement here by Arauco. On another front, Mina Justa has begun works on the Mina Justa Subterránea project. In October, the company has begun the works related to the access ramps. With this, the Justa underground or Mina Justa Subterránea project is finally launched. Just to remind you, this is a copper project. It is a complement to the existing open pit operation. It will be complemented by this underground operation, the underground phase. The total investment for this new phase should amount to approximately $500 million. It should add approximately 500,000 tons of total production along the life of mine. Life of mine also should be expanded by four to five years. Of course, this means making production more stable along the life of the mine. This allows for a better use of the existing infrastructure.
A very attractive project here for metal that is going through a very good pricing scenario in the world markets. Moving on to the ESG developments for the quarter, Sustainable Fitch validated the allocation and impact of the resources obtained by the first green bond that Empresas Copec, the parent company, placed in the local market last year. This is a report that confirms the fact that we have already used all of the resources obtained by this bond placement in eligible green projects, including categories pertaining to renewable energy, energy efficiency, and clean transportation. With that, of course, we are complying with the green bond condition for this instrument, and we are contributing to the United Nations Sustainable Development Goals. Also, some interesting developments in electromobility and electric panels.
We continue to make progress in our positioning in the electrical panel generation business, this time by starting construction of the largest photovoltaic parking lot in the country, together with a large client that is going to make use of the energy generated here. An interesting development here with a very efficient use of the infrastructure. Also, in what is a very good piece of news for the company, also for the city and for the country, Calama, which is a city located in the north of Chile and very linked to the mining industry, becomes the first city in Latin America to have 100% electric public transport sourced by Copec. Our division, Copec Voltex, which is our electromobility division, continues to make a lot of progress in electromobility and particularly in electromobility related to public transportation.
Finally, just to remind you of the invitation for our Investor Day. The Investor Day this year is taking place next Wednesday, November 19th. It is going to take place at the Club Cincuenta , which is located right next to our corporate headquarters. All of you are more than cordially invited to join us in our Investor Day, where we will be giving away some interesting pieces of news and analysis and views regarding our different divisions. That is what we had prepared for you with the presentation. Let me ask Cristián to please, Cristián Palacios from our Investor Relations Department and Marcelo Bennett from Arauco to please join me here in the room. Also, Gianfranco will be connecting from abroad through the Zoom platform in order to address the questions you might have. Thank you all very much.
Thank you.
We will start the Q&A session now. If you have a question, please write it down in the Q&A section. Please remember that your company's name should be visible for your question to be taken. Please hold while we poll for questions.
Okay, hello everyone. We're going to start with the Q&A session. I have a couple of questions for Rodrigo. Alfonso Salazar and Juraj Domic are asking about electromobility. What are your expectations for fuel-safe growth over the rest of the decade? To what extent has the electromobility wave been delayed compared to your expectations at the end of last year, for example? Related to that, could you comment on the next steps for Terpel in this regard?
Yeah, thank you very much for the question.
Electromobility is a trend that is a long-term trend, but anyhow, it is transformational for the business and totally structural. Therefore, we have decided to prepare ourselves well in advance for facing that trend. We still believe that markets in Latin should continue to grow pretty much in line with GDP for roughly 10 years or so. We are updating our estimations quite frequently. Even though we have still 10 years ahead of us, we have decided to take steps immediately in order to prepare ourselves for facing that scenario. Along those lines, one of the things we have done is to actually position ourselves as leaders in electromobility. You have seen us, as a matter of fact, a couple of news that I gave throughout the presentation had to do with our positioning in electromobility.
Together with that, we have been pushing other areas of development having to do basically with strategic complements to our existing assets. Those areas in energy, mobility, and convenience where we think we can add value in the sense that they have synergies to our existing assets, we have been developing them gradually. The aim is basically to open up options in order to prepare ourselves for the upcoming scenario of electromobility and energy transition in general. The good thing about this strategy is precisely that we can regulate our speed of transition according to how we see the market evolving, at what speed we see the market evolving. It is a flexible strategy where the philosophy, the final philosophy is basically to open up options. Terpel is doing exactly the same thing. We are working coordinated with them, and they are following basically the same lines.
Thank you, Rodrigo. Again, Juraj Domic at LarrainVial asking about Mina Justa Subterránea project. What are your expectations in terms of project finance?
Yes, we are making interesting steps in Mina Justa Subterránea. As I told you during the presentation, we have begun construction works related to the access ramps. This is a very interesting project, especially in the very attractive copper pricing scenario that we are facing. It should add around 500,000 tons during the total life of mine. It is in a very profitable way because we use up the existing infrastructure. We are still working and looking at options for the financing. Most probably, it is going to be a combination of internally generated cash flows and debt in a relation that we are still working on. We should have no trouble at all financing the project with debt plus internally generated cash flows.
We anticipate no need of cash contributions from the shareholders.
Next one comes from Enrique Marquez at Goldman Sachs. The first part goes to Rodrigo, please. Can you give some update on the Sonacol asset, on the process sale of that asset, or any other asset you can dispose in the future?
No, really not a lot to inform at this point in time. Just a general review for asset sale, divestment philosophy. We basically are permanently evaluating the possibility of adding value through divestments. We acknowledge that there are some assets that are worth more in the hands of third parties rather than within our portfolio. This is especially true when we have companies with very stable cash flows going forward.
At this point in time, when we are facing a very demanding project such as Sucuri, of course, asset sales are a very interesting way of strengthening or balancing while at the same time adding value for ourselves and for the company and for the shareholders. Besides that general philosophy, not a lot to inform at this time.
Thank you, Rodrigo. The second question is for Gianfranco. If you can give an update on how much forestry planted you already have for the Sucuri project, and have you already secured enough land for the project?
Thank you. As you remember, we need approximately 400,000 hectares to supply the mill once it is in full production.
With the hectares that we have planted to now, which is close to probably 200,000 hectares, the ones that we are going to plant from here to the start of the mill, which is we are planting at a rhythm of about 65,000 hectares a year. The fiber we already secured with the contract that we did with Eldorado and other partners that we are doing, we are going to have enough fiber to supply the mill from the start. We already got rid of any problem of supply of wood to the mill, of course. The land we are securing is more than the one that we have planted. We are ahead in securing land, and we have enough buffer to continue planting. In that sense, we do not see any problem with the supply of fiber to the mill.
Okay, and we don't have more questions at this moment. I'll turn it back to you, Barrett.
Thank you. This concludes the question and answer section. At this time, I would like to turn the floor back to Mr. Rodrigo Huidobro for any closing remarks.
Thank you all very much for attending today. We expect to see you next week at our Investor Day and also meet you back at some point at the beginning of March for taking a look at the results for the full year 2025. Thank you very much. Have a good day.
Thank you. This does conclude today's presentation. You may disconnect now and have a nice day.