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• Sales: $1.888 billion for Q2 2024.

• EBITDA: $377 million, with a 30% increase quarter-over-quarter.

• Net Income: $125 million for the period.

• Pulp Business EBITDA: $251 million, with an EBITDA margin of 33.5%.

• Softys Business EBITDA: $132 million, with an EBITDA margin of 15.1%.

• Biopackaging EBITDA: $24 million, a 27% decrease quarter-over-quarter.

• Operating Costs: $1.2 billion, representing 63% of total revenues.

• Capital Expenditures: $146 million for Q2 2024.

• Free Cash Flow: Net outflow of $22 million.

• Total Debt: Nearly $5.4 billion.

• Net Debt-to-EBITDA Ratio: 3.75 times.

• Warning! GuruFocus has detected 4 Warning Signs with XSGO:CMPC.

Release Date: August 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Empresas CMPC SA (XSGO:CMPC) reported a 30% quarter-over-quarter increase in EBITDA, driven by higher average sales prices and lower cash costs.

• The Pulp business achieved an EBITDA margin of 33.5%, with a significant 61% year-over-year increase in EBITDA.

• Operating costs decreased by 3% quarter-over-quarter and 14% year-over-year, indicating improved cost management.

• The company has made progress in reducing its net debt-to-EBITDA ratio from 4.03 times to 3.75 times, with expectations for further improvement.

• Empresas CMPC SA (XSGO:CMPC) has been conservative in capital expenditures, preparing its balance sheet for future projects like the Natureza Project.

Negative Points

• Net income decreased to $125 million from $209 million in the previous quarter, indicating a decline in profitability.

• Softys business experienced a 20% quarter-over-quarter decrease in EBITDA, affected by rising pulp prices and currency depreciation in key markets.

• Biopackaging saw a 27% quarter-over-quarter decline in EBITDA, attributed to reduced sales and higher raw material costs.

• Pulp sales volume decreased by 10% quarter-over-quarter and 21% year-over-year, impacted by logistical issues and weaker demand in some markets.

• The company's net debt remains high at $4.761 billion, with a net debt-to-EBITDA ratio still above its internal policy range.

Q & A Highlights

Q: Recently, hardwood pulp prices in China have dropped to around $650 per ton. Have pulp buyers returned to the market, or do prices need to drop further to increase buying activity? Also, how do you see leverage evolving, and how might it affect the Natureza Project? A: (Francisco Ruiz-Tagle Edwards, CEO) Chinese activity has been slow but is now picking up. Orders have come through at the indicated price, with softwood demand stronger than hardwood. Global inventories are below historical levels, suggesting price stability. (Fernando Hasenberg Larios, CFO) Our net debt-to-EBITDA ratio has improved to 3.75, and we expect it to be within our policy range by year-end. We are preparing our balance sheet for the Natureza Project, being conservative with CapEx and capital allocation.