Good morning, everyone, welcome to Empresas Copec's Fourth Quarter 2025 Results Conference Call. Today's presentation and the fourth quarter 2025 earnings release are available on the company's web Investor Relations website, investor.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 in 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 a question to be taken. I will turn now 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 taking a look at the results of the fourth quarter 2025 for Empresas Copec. We are going to go through a brief presentation where we are showing the main results, figures, and developments of the quarter. After that, as usual, we are going to open it up for a Q&A session, at which point I will be joined by Mr. Cristián Palacios from our Investor Relations department and Mr. Gianfranco Truffello, CFO of Arauco. They will both be helping us out to address any questions you might have by the end of the presentation.
Please feel free to pose your questions right away, all along the presentation through the platform that is present in the Zoom platform via the chat that is present in the Zoom platform as from now on. Having said all that, once again, welcome. Let us begin with the most important highlights of the quarter. The company recorded an EBITDA of $599 million, which is 7% down with respect to 2024, the fourth quarter 2024, on the back, especially of a lower performance in Forestry, as was the tone during the year, specifically because of lower prices in pulp. That was offset partially by an increase in energy.
In energy, we had a higher EBITDA with higher volumes, year-on-year for Copec S.A. and Abastible. A very robust, very strong performance of these two companies all throughout the year, and in particular, in the fourth quarter, we had higher volumes and favorable industrial margins in Copec S.A. and higher volumes across the different geographies for Abastible. QoQ, slightly increased costs in Copec S.A., which is quite frequent by the end of the year. In the case of Forestry, we had a lower result year-on-year, which is basically explained by lower prices of volume, as we had seen in the previous quarters as well. In the fourth quarter and compared to the third quarter, we had lower prices again, but this time offset by higher volumes to a certain extent.
Mixed results in general in the panels division, but with stable results overall, as we will see going ahead. In terms of the main developments of the quarter, we continue to make progress in our Sucuriú project in Brazil, already standing at 43% progress by the end of the year. We're also carrying forward two different expansions in our panel division, one in Chile and one in Mexico, both of them approaching a 75% progress by the end of the year. As another important highlight, we are presenting here the fact that Marcobre, which is the company that owns Mina Justa, issues its first international bond amounting to $400 million and allowing it to refinance its existing liabilities. Let us move to some other important figures for the quarter.
EBITDA, as I said before, is $599, which is 7% down year-over-year and 7% down as well QoQ. Before that, let me just highlight the figure for the Adjusted EBITDA. We have presented this figure for many years already in our press release. We are now wanting to highlight it and emphasize it more. Basically, on the back of the fact that results coming from our non-consolidated companies, such as Mina Justa, have gained a lot of importance in our business portfolio, and therefore, this Adjusted EBITDA figure is more representative of the cash generated by the company in a particular quarter.
We will be presenting both figures, but at this point in time, giving a little bit more importance than before to the Adjusted EBITDA, which amounts to $714 million for the quarter. Quite significant, precisely because of the contribution of Mina Justa in this particular quarter. In the case of energy, it's up to $322, which is 30% up year-on-year and -8% down QoQ, which, as I said before, is quite usual by the end of the year to see a slight increase in expenses in general for the energy division. Forestry is down 30% year-on-year and 2.5% Q- on -Q, basically on account of lower pulp prices.
Mina Justa is also presented there with a record, a historical record number for the EBITDA of $394 million. Just to make it totally clear, this figure includes an impairment reverse, one-time of course, of Mining assets for $82 million. But anyhow, it is a figure that is above $300 million for the quarter, so quite impressive, the EBITDA generated by Mina Justa. In terms of our debt metrics, net financial debt to EBITDA is up to 3.58, 3.58, which is up with respect to the preceding quarters, of course, because basically we're undergoing this huge investment in Brazil. When you measure it according to Adjusted EBITDA, it goes down to 3.26.
It makes a lot of sense from a rating agency perspective to use the Adjusted EBITDA figure, which includes cash generated by the non-consolidated companies. CapEx, pretty much in line with our budget, is up to $955 million. Most of that, of course, devoted to the project in Brazil. You can see our figures there in a historical context, $599 million, so lower than last year and lower than the immediate preceding quarter as well. The net income, however, is up with respect to both the preceding quarter and the comparable quarter last year, essentially because of the contribution of the copper division Mina Justa. In terms of our finance metrics, you can see there that our maturities are very well-balanced going forward.
In terms of net financial debt to EBITDA, we're up to almost 3.6% and 3.2 when measured on an Adjusted EBITDA basis. All of this, of course, we were expecting it because of the progress in the Sucuriú construction in Brazil. As you can see in this historical context, we have been there before. In other expansion cycles, we have hit this kind of figures or these levels of indebtedness and even above this. This is totally expected, and we expect to be deleveraging quite quickly as soon as Sucuriú continues to, as soon as Sucuriú starts operations. Well-balanced debt in terms of maturities, in terms of allocation among the different companies, and also in terms of type of debt.
All currencies matched to the functional currencies of each different company. In terms of returns and EBITDA margins, of course, trending a bit down during the year because of the drop in pulp prices. During the last months of the year, we will begin to reflect a better pricing scenario and therefore, better financial ratios as well. Digging deeper into the Forestry division, you can see here that Arauco ended the quarter with a net income of $51 million for the fourth quarter 2025, compared with $105 million for the fourth quarter 2024. EBITDA is $288 million, as reported by Arauco, compared with $408 million for the comparable quarter 2024. This is basically caused by lower pulp prices and volumes.
Towards the end of the year, a decrease in wood products volumes. All of this is partially offset by higher panels prices and also lower unit selling costs for some of our fibers. You can see a detail on the behavior of our selling costs for the different fibers. A mixed performance in general during the last quarter compared to last year and also QoQ. Overall, however, during the year, we saw a positive performance or a favorable performance of selling costs, in terms of the costs trending down all across the board for the different fibers for the year as a whole. Mixed behavior, though, through the last quarter.
You can see the EBITDA for pulp there standing at $223, which is above the third quarter $25, but still below the levels that we were recording towards the end of 2024. All of that, of course, on account of the lower pricing scenario. Overall, good sales volumes by the end of the year. A little bit of context. What we saw towards the end of the quarter, a stable market in general. We were able, as well as other producers, were able to implement some price increases in both softwood and hardwood. Inventories declined by the end of the year and are now standing at reasonable levels in terms of their history, as you can see in the graph there.
In China, we saw stable demand, an increase for some particular fibers, such as unbleached, because of some restrictions on the internal market. Stable market coming from printing and writing. As I said before, prices in softwood and hardwood increasing during the quarter from Arauco and also from other players in the market. In Europe, we in general saw a challenging year as a whole. The fourth quarter continued to be challenging because of a weak demand, a weak economy. However, Arauco was able to implement some price increases in softwood. A challenge, as I said before, to printing and writing industry and tissue definitely more stable. In terms of dissolving pulp, we saw stable textile pulp market as we saw throughout the year.
The lyocell portion of the market was more challenging towards the end of the year. You can see there, prices have been trending upwards during the last months of the year. You can see Arauco's price net in China, in the graph that is there on the bottom left-hand, left, corner of the screen. You can see that hardwood is trending towards $590 and softwood is $710, whereas dissolving pulp is at $780. A positive trend towards the end of the year with subsequent price increases implemented in the last weeks and months of the year 2025.
In terms of the outlook, the industry is expecting a lower production during the year, especially during the first quarter because of closures in some mills, because of disruptions related to weather, strikes in different parts of the world, and in general, reduced operating rates. Some restrictions in Indonesia also could make it more difficult for local Asian producers to continue with a stable production throughout the quarter. That could also put some upward pressure on the markets. In China, Arauco has seen and the industry in general has seen stable demand, expected to continue that way, with the possible exception of the Chinese New Year, as usual. Steady levels of operation for paper mills and a good, in general, quite positive environment for hardwood.
Apparently a little better than softwood because of the input supply of softwood and also lower cheap prices for softwood. Producers in the industry continue to announce increases in prices. There's already some increases announced for March. Stable demand expected in Europe. Some mills, some paper mills are anticipating their orders. Therefore, we are seeing high rates in the utilization of paper machines. It's still a challenging market. Moving on to wood products, you can see the EBITDA recorded during the fourth quarter 2025, which is 122, a little bit above the third quarter 2025 and below the fourth quarter 2024. There's essentially a mixed performance in terms of prices and sales volumes for the different products within this division.
Overall, also a mixed performance in terms of the different geographies, as we will see on the next slide. Overall, this is a division that is, of course, much more stable than pulp. During the year, it presented a performance that is very much in line with its historical levels. The outlook is mixed once again. North America, which is almost half of our sales, is a little more challenging than our LatAm markets. MDF is looks a challenging market with demand, some oversupply. Same thing for particleboard. Difficult market with also some oversupply and some low demand. Remanufactured products doing a little better because of the supply from Brazil impacted by higher tariffs. Plywood, where stability is expected in general.
For our LatAm market, which are approximately 40% of our total sales, we are seeing a potential positive situation in Brazil, where the market could rebound during the first quarter. Strong particleboard demand and rising MDF prices. Likewise, in Chile, we are seeing strong demand for some products, in particular particleboard and melamine. In Argentina, as we have seen over the last few quarters already, a positive trend potentially to continue at the beginning of the year for panels in the Argentine market. All in all, as I said before, a mixed outlook for the different geographies and the different products.
On the aggregated level, we are seeing stability for our woods and panels division, and we ended up the year 2025 with a figure, an EBITDA figure, which is around $500 million and which is pretty much in line with the historical average for that division. Moving on to energy. A very good year for energy. We saw Copec ending up the year with an EBITDA of CLP 215 billion, which compares well with the fourth quarter 2024. It's an increase compared to the fourth quarter 2024. Likewise, in terms of net income, we had a significant increase in the bottom line with respect to the comparable quarter last year. Performance continues to be good.
We see in Chile in particular, we see higher operating income and EBITDA stemming from higher volumes, a very positive industrial margin, and a very good performance in lubricants, which has been taking place throughout the whole year. A robust competitive position, a very good customer perception, a very efficient network from our fuels division, and all in all, a very good year. The volumes are flattish compared to the last year, to the year 2024, to the full quarter 2024, and are up by almost 5% compared to the third quarter 2025 in the gas station segment, and is strongly up year-on-year 16% and 6% up Q- on -Q for the industrial channel.
The industrial channel has been one of the highlights of the year because of the very good performance of Copec in this particular segment. Moving on to Terpel. An EBITDA that amounts to COP 415 billion, which is slightly down with respect to the figure for the fourth quarter 2024. Anyhow, at very healthy levels. Likewise for the net income, COP 138 billion, healthy levels, in this case, a little above the fourth quarter 2024. The reason for the decline in terms, in operating terms is basically decreasing volumes in some particular geographies, an unfavorable inventory revelation effect in this quarter in particular.
All of this offset by the very good performance, as we've commented in previous quarters, in the lubricants division, which is something that has been a driver of the good performance in fuels in general throughout the whole year. Abastible, which is shown now on screen, recorded an EBITDA of CLP 73 billion, significantly up with respect to the fourth quarter 2024. Net income as well is significantly up with respect to the comparable quarter in the previous year. This is on the back of course, of the incorporation of Gasib, which is the new affiliate in Europe, in Spain and Portugal, which is being consolidated for the first time during the year 2025.
On top of that, a very good performance of the previously existing divisions in Chile, Colombia, Peru, and Ecuador, all of which have increased their volumes quite strongly. In general, a very good performance of Abastible throughout the year. You can see some more operational detail on screen here. Volumes in general increasing quite strongly across the different geographies, with some things to highlight here. In general, a good performance of the bottled segment and some particular milestones that have marked the behavior of the bulk segment in the different countries. In the case of Colombia, a recovery in general of the production across different sectors of the economy. In Ecuador, a higher demand of liquid gas as a substitute for our other sources of energy.
In the case of Peru, a very strong performance of demand coming from the poultry and Fishing industries, which are very important industries within the country. In the case of Chile, also an increased demand from the Fishing industry, as well as a driver that has been relevant and quite recurrent over the last few quarters, which is the substitution of other sources of energy in Chile as well. All in all, a very strong performance of Abastible, a very good EBITDA generation. In the case of Gasib, which operates in Spain and Portugal, and which we incorporated at the beginning of year 2025, we continue to see a very strong EBITDA generation, strong volumes, flattish with respect to the fourth quarter 2024. In general, throughout the year, a very good performance in terms of volumes and margins.
Moving on to our other investments, Cumbres Andinas, which is the company that owns Marcobre, Mina Justa . We've seen, as I commented at the beginning, a record EBITDA generation, $394 million in EBITDA for the quarter, which once again includes a one-time effect related to the reversion of an impairment of Mining properties that we have recorded before. There's $82 million that is one time, anyhow, an EBITDA of more than $300 million for the quarter, which is very, very significant. In line with that, a net income of $246 million. You can see there, of course, a very important reason underlying this very good performance is the evolution of copper prices.
You can see them in the graph there for the prices taken from the London Metal Exchange, which is already up to $6 per pound. Together with that, very important increase in prices. Offsetting the performance, partially, we saw lower volumes and higher cash costs, high cash cost of $1.8 for this particular quarter. Other smaller companies shown on screen there, I call very stable, but also with a good performance in this particular quarter, with a net income that goes up, good results on the back of favorable volumes in general. Our Fishing division, Igemar, with a loss, however, a positive trend when compared to the performance in the fourth quarter 2024.
In the case of our LNG companies, Metrogas and Agesa, stability and in general an improvement and a sustained good performance, very stable business in this particular case. Brief words about the main developments of the quarter, of course, an update on the Sucuriú project. It is making progress according to expectations and according to plan, and even a little bit above what had been planned. 43% approx as of December 2025. A good figure and in line with the plan, and as I said before, a little bit above what was planned. A good evolution of the civil construction, which reached 58% progress. A very strong execution across some key streams that supported the transition into the mechanical assembly phase, which is the next phase to take place in the mill.
A very important progress in the boilers, the evaporation plant, lime kiln, the fiber line, and the drying areas have been achieving good progress through the quarter. As a major milestone, the railway construction began. There's an agreement here for building a railway line with 26 locomotives and more than 700 rail cars and a capacity of approximately 10,000 tons per day. This is a railway line that will be joining the plant, the mill site, with the existing railway line that goes all the way up to the port. Very important part of the logistics here is already under construction. On another piece of news here regarding the panel mills that are also under construction.
We have two, one in Mexico and one in Chile, both of them attaining 75% progress approx at this point in time. Also a very good progress in these two panel mills that are very well into their last phase of construction, one in Chile, one in Mexico. We also wanted to comment on Marcobre, which is the company that owns Mina Justa. As you have seen over time, this is a company that's been generated very solid results. Credit metrics are very good, and therefore it was able to tackle and hit the public markets for the first time and issue the first international public bonds for $400 million in very good financing conditions. 10-year maturity, a bullet of course, and 5.75 as an interest rate. Very important operation here.
Together with that, Marcobre had just closed syndicated refinancing for its existing debt. Both operations, the syndicated loan and the bond issuance, will allow it to refinance its existing debt with a better maturity schedule and under better conditions as well. Very significant financial milestone here for Marcobre, the owner of Mina Justa. Empresas Copec held the Investor Day by the end of November last year. Thanks to all of you that attended that event, and of course, we were able to communicate once again the main drivers of our business strategy, highlighting, of course, the focus of the company on natural resources and energy.
As we have said many times, the active management of the portfolio of business, including being very active in divestments of assets, as we have shown many times here, in order to make value more transparent for the market and for all shareholders. Some, we saw some presentations by different executives from the different divisions. We saw the performance of the different new businesses of Copec, the progress made in Sucuriú, the development of Abastible's new investment in Europe, and also some highlights of the Mina Justa expansion.
In general, Empresas Copec once again communicated its commitment to a long-term value creation strategy, which basically means, especially for these years to come, which are going to be challenging because of the building of Sucuriú, it means focusing very strongly on profitability across the different divisions, a flawless execution of the project that is under construction, and as has been our character for many years, a prudent financial management. A very important recognitions here that we always like to highlight is this award, La Voz del Mercado, which Empresas Copec was awarded for the seventh year in a row together with other companies in Chile. This is granted by EY, the Santiago Stock Exchange, and the Institute of Directors.
It's awarded to companies that stand out for corporate governance and sound management and is awarded on the basis of a poll and the opinions and perceptions of directors, investors, analysts, and the market in general. A very important award here for the company once again. Several awards and recognitions in terms of the financial management and divisions. A brief thank you note here for all your support during the year 2025 when we were awarded several recognitions in different rankings. ALAS20 for investor relations, the Extel Awards for Institutional Investor recognitions in several categories: Best CEO, Best CFO, IR Program, IR Team, and IR events. Also, Best CFO prize in Marcas Ciudadanas, awarded by Cadem. Arauco also received the Development Financial Institution-Backed Deal of the Year by LatinFinance.
Very important awards and recognitions here for the work we do. Very thankful of your support here. In terms of ESG, we always highlight some developments in terms of ESG and some important milestones during the quarter are shown here on screen. Copec continues to expand its electromobility charging network and has gone above 90 fast-charging stations nationwide from the northernmost point to the southernmost point of Chile. Consolidating one of the most important networks in LatAm for high-power charging. Of course, the plan here is to continue expanding this network in 2026.
Arauco took part in the COP30 event in Brazil, in Belém do Pará, where it presented different developments in terms of its strategy in reconciling development, economic progress, and also biodiversity protection, a very important pillar of our, of the long-term strategy of Arauco. Together with that, a presentation of the main drivers in terms of carbon neutrality, which has also been a landmark of Arauco strategy throughout the years. Finally, Terpel, which is doing in Colombia, moving along the same lines that Copec has been moving in Chile, which means basically preparing for a gradual transition, for a gradual energy transition by going into the provision of some other sources of energy, in this particular case, energy or power generation.
This particular initiative has to do with Parque Solar Planeta Rica it is called, which is a power generation photovoltaic project of 26 megawatts. By doing this, Terpel, as Copec S.A. is doing in Chile, is preparing in Colombia for the energy transition scenario that is gradually taking place. That is the information we had prepared for you as the main highlights of the quarter. We will be happy to open it up for the Q&A session. Please post your questions through the chat that is in the Zoom platform. I will ask Cristián and Gianfranco to please join me for this part of the presentation and for opening the Q&A session. Thank you very much.
Thank you. We will start now the Q&A. 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.
Thank you. Yes.
Okay. Hello. We're gonna start this Q&A section. Thank you all for attending this webcast. I'm gonna start with Enrique Marquez from Goldman Sachs. Two questions. The first one is, both are in Forestry. Gianfranco, land needed for Sucuriú is already at 80%. Any chance you already had expected the cash costs or at least average ratios for the project in terms of the forest supply?
Yeah, it's true. We have already 330,000 hectares of land, of which we have planted and also acquired standing timber for 260,000 hectares. We are in a good path to get all the plantation needed for the start of the mill. The average ratios is what we have expected, about 90-95 kilometers from the mill. That's the average. Up to now, we're holding for the expectation that we had on the cash cost for the mill. It should be a very competitive mill, very comparable with the best ones in Mato Grosso do Sul. We are holding the expectations that we gave at the beginning.
That is probably about at the mill, probably $140 per ton cash cost, and then to the markets could be about $250, something like that. We will know for sure once the mill starts running and depending on exchange rate and the cost of chemicals and all of that. We are in the numbers that we projected when we analyzed the project.
The second is, what is the total company's CapEx expected for 2026? Do you think current cash position will be enough to cover the maturity in debt for this year, given the high CapEx disbursement expected? If you're planning to issue more debt.
Well, yeah, we have a plan of a CapEx that could be something between a little bit less than $3 billion up to probably $3.4 billion, depending on circumstances. For that, Sucuriú is between $2 billion-$2.5 billion more or less. The rest is planting that we do in Chile and also in Brazil and other business as usual projects that we do maintenance in our mills and also two projects that we are finalizing in Chile, which is the one project in Chile is one of the OSP project and one project in Mexico, the [audio distortion] mill. That could be between $3 billion-$3.4 billion. Regarding cash, we had enough cash.
We think we ended the year with $1.3 billion. We have dispersed another part of the line of the $2.2 credit line that we have for the financing of Sucuriú. We have the capital injection of Copec that is still to be dispersed, and we probably will do some refinancing basically to take care of the amortization start due in 2027, and then 2029 and 2030. Most probably we'll do some refinancing. It's something we do every year. With the cash that we have, the generation plus the available credit lines, I think we're in a good shape for the total of this year.
Next one is from Lucas [Mineses]. Basically, if you can comment your thoughts on market outlook for pulp and wood products this year and especially regarding prices?
Yes. Well, prices has been going up. This start of the year we have been able to increase prices $30 now. The last increase in prices was for February that we increased $10 in short fiber. We had unchanged prices for long fiber, and we were able to increase a little bit the dissolving pulp. We are in a good trend, but there's the Chinese New Year was recently, and now we have the meeting of the pulp week in Shanghai. There's probably gonna be some conversation about pricing over there in China. One competitor of us has already announced increase of prices for March, we will see if that goes on.
Compared to last year, of course, we had a very volatile year last year. We started with good pricing, similar to the ones that we have now. On May we had the Liberation Day news and prices went down very quickly. Then they start recovering afterwards. From the bottom of the market, that was probably June last year, we have been able to recover about $100 price. That's good. A price of $600, which we have now for hardwood, I think is a average price, is a really good price. We need to see how things develop in the market, especially because of the recent things that are happening in Iran. Especially the pricing of paper in China.
That's the most important thing, which is the margins of the paper producers in China that need to recover a little bit to support increases in pricing of pulp. In wood products, I think it's more stable on a total portfolio basis. We have weaker results from the United States and Canada, but better results in Latin America, Brazil, Argentina and Chile. Those things tends to balance, and I think we're gonna have a similar year from last year in terms of total EBITDA, but with different results in other markets. In North America, rates are still high. The mortgage rates have been going down, but still the affordability of housing is difficult. This has been some slowing in construction.
Also the continuous changes in tariff has been putting some cautiousness on the buyers in the United States. We hope that these things get resolved and as rates goes down, we can see more activity in construction and remodeling in the United States. That's more or less the view.
Thank you, Gianfranco.
Mm-hmm.
I have Alfonso Salazar at Scotiabank with two questions. First one, can you comment on the implications of the ongoing situation in Iran to your fuels division? That's one. Two, how do you expect the energy transition to evolve in your key markets over the rest of this, of this decade? When do you think ongoing increase on fuels and gas demand may slow down, and what could drive further demand growth beyond 2030?
Okay. Thank you, Cristián. Thank you, Alfonso. Well, probably too soon to tell. As you all know, events are unfolding right now in the case of the war in the Middle East. In previous episodes we have, like this, we have seen increases in oil prices in general, and the way that impacts our business is twofold, I would say. First of all, an increase in prices usually means positive revaluation of inventories, which is a short-term effect.
Longer-term, it definitely means and if it stays, if the increase is significant and if it stays there for long, it usually means a decrease in demand and it decrease in activity as a whole, in economic activity as a whole, which is of course damaging for the company and also damaging to consumers. So let's hope that this will be solved pretty quickly. In terms of energy transition and the timing of that, well, projections are also very volatile on that. We get permanently get elements that lead us to think that it will be quicker than initially expected, and then we get other news on adoption and rates of adoption and new developments on technology that lead us to think that it will be slower than initially thought.
Currently, we're thinking of a period of 5 - 10 years of continued growth in our traditional business. After that, of course, we'll reach a plateau, we begin to see a slight decrease in the conventional fuels business. It's still a long-term threat, but it's transformational and it's structural. As we've commented before, we have adopted a strategy of opening up options. You've seen Copec taking several steps in different directions. One of them is to position itself as a leader in electro-mobility. You've seen our recount there of the all of the initiatives we are taking in that respect. We are now one of the leading and one of the largest networks in Latin in terms of charging.
Together with that, we have adopted a strategy of entering into new energy areas, taking advantage of our very good positioning, in terms of our customers, in terms of our brand. We are beginning to offer new energy products such as power generation, for example, and trading of electricity, and that has done very well so far. Thirdly, we have a venture capital initiative, whereby we look at new technologies and new business models that may fit in well with what we have and complement our existing activities. Fourth, we have also invested in some assets that are a little bit different from what we've traditionally done, but which have very significant synergies with our existing assets. Blue Express, for example, which is last mile logistics, and which has been doing very well.
With that four-pillar strategy, what we're trying to do is to prepare ourselves in the best way possible for any potential scenario in terms of energy transition. The good thing about this strategy is that we can either speed it up or slow it down depending on the evidence we see as to how energy transition is doing. That's the strategy. We believe we are in a good position, and we will be still looking at what happens in the markets and keeping you posted on that.
Thank you, Rodrigo. Tathiane Candini, JPMorgan, with a couple of questions. The first one was about pulp prices. It was already answered, I'm going with the second one. Gianfranco, about the recent conflicts, what should be the impacts on the Forestry industry? If you can comment a little bit on how your freight contracts work. That's the first one.
Well, as Rodrigo said, it's too soon to tell. We don't sell a lot to the Middle East. I mean, basically it's wood and very little, very low margins there, so it's not very important. Pulp, we sell basically to China, the rest of Asia, and Europe, so we don't have an impact on the product. Freight could be, but we don't have a lot of routes coming from the Strait of Hormuz, so that shouldn't impact directly. Of course, when these things happens, there's a distortion of all the freight industry. We have long-term contracts basically on containers, so we don't expect any short-term impact in freight cost for us and neither in the demand for products.
This thing is just starting, and probably depending on the developing, the coming weeks, the situation could be different. Right now we don't see any direct meaningful impact.
Mm-hmm. Also could you, what are the next milestones for the project? Is this level of pulp price enough for the project, or could we expect some investments to support the financing of it?
The project is advancing very quickly. We are 43% advanced, and this year is very important in terms of the amount of people that are going to be working in the site. We are going to reach the peak of 15,000 people working there. We are currently in the mechanical erection, which is very important in doing the recovery boiler, the power boiler, and other aspects. It's very important right now. The level of currently price, I think it's good. It's around the average we assume for the projection of cash flow, let's say. Last year was below our budget, I would say.
We hope that next year will be above budget, but we are prepared to do some selling of timber and other things in order to counterbalance the different of average pricing that we saw last year. We still need to see how the price develops through the year, but we are in a better shape than we were last year, but we are prepared in order to do some divestments, in order to keep the debt contained.
Also could you, Rodrigo Godoy, from Credicorp Capital, you mentioned last year that the efforts are gonna be in advancing all you can to have a buffer for this year given the strong CapEx phase. How far ahead are you related to the construction schedule?
Yes. We have been able to maintain the advance. We were about 5% or 6% above budget, and we continue to have that advantage. That is very important to have it as a saving account because things could happen and we're maintaining the date where the mill will start, but we're keeping this buffer in order to for any problems that could happen. Right now we are in a very good shape in terms of advance, and we continue to maintain that 5%, 6% ahead of schedule.
Thank you, Gianfranco. We don't have more questions. I turn it back to the operator, please.
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.
Okay. Thank you very much. Thanks, Cristián and Gianfranco for joining us today, and thanks to all the audience for attending. We hope to see you at some time at the beginning of May to take a look at the results of the first quarter 2026. Of course, lines remain open for any additional question you might have. You can contact our investor relations department. Thanks a lot for attending, and see you in May. Bye-bye.
Thank you. This concludes today's presentation. You may disconnect now, and have a nice day.