Empresas CMPC (CMPC) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 sales reached $1.888 billion, down 3% sequentially and 6% year-over-year, with EBITDA at $377 million (20% margin) and net income of $125 million, reflecting a 40% sequential decline but stable year-over-year performance.

• Operating costs decreased 3% quarter-over-quarter and 14% year-over-year, representing 63% of revenues, driven by lower direct costs in pulp and cost control initiatives.

• Free cash flow improved to a net outflow of $22 million, a significant recovery from the previous quarter.

• The company maintained a focus on profitability, cost reductions, prudent capital allocation, and sustainability, with new ESG initiatives and community support.

• Severe floods in Rio Grande do Sul, Brazil, disrupted logistics but did not damage assets; operations normalized in June.

Financial highlights

• EBITDA margin for the quarter was 20%, with pulp contributing 62%, Softys 32%, and Biopackaging 6%.

• Net debt stood at $4.761 billion, with a net debt to EBITDA ratio of 3.75x, improved from 4.03x last quarter.

• Operating costs were $1.2 billion, representing 63% of revenues.

• Investments totaled $146 million in Q2, down 67% year-over-year.

• Free cash flow improved to a net outflow of $22 million, compared to $176 million in the previous quarter.

Outlook and guidance

• Net debt to EBITDA is expected to continue improving, targeting a range within internal policy (2.5–3.5x) and aiming for below 2x before starting the Natureza Project.

• CapEx for 2024 is projected around $600 million, with similar levels expected in 2025 to prepare for the Natureza Project.

• Dividend policy for 2024 set at 30% of net distributable profit, with two interim dividends and a final dividend planned.

• Pulp and tissue volumes are expected to normalize in the second half, with some recovery in Mexico but continued challenges in Brazil and Argentina.

• Cost improvement programs in pulp are ongoing, with further reductions anticipated.