Arauco Presentation For Wssu

Celulosa Arauco y Constitución S.A.

May, 2008

Arauco is a world-class forest products company

One of the world’s lowest cost producers

World’s largest owner of radiata pine plantations

Diversified products and cash flows

US$ cash flows – revenues mostly exports

High potential for sustained growth and profitability

Experienced management and strong shareholder support

Strong credit ratios and solid cash flows throughout pulp price cycles

74,61 %

60,82 %

99,98 %

ANGELINI GROUP

Consolidated Selected Financials (As of December 31, 2006)

(1) Stand alone debt

(2) Operating income + Depreciation + Stumpage

(3) As of March, 3 , 2006

US$ MM Antarchile Copec AraucoAssets 10.633 10.238 7.815 Debt (1) 273 - 2.423 EBITDA LTM (2) 1.364 1.438 1.123 Sales LTM 8.262 8.258 2.850 Market Cap (3) 7.672 16.847

Arauco has delivered a solid financial performance throughout cycles…

%

EBITDA1

US$ MM


EBITDA margin %

…which compares favorably to other forest products companies

EBITDA1 margin – 2006

%


Weyer-haeuser Baa2/BBB

IP Baa3/BBB

Arauco Baa2/BBB+

UPM Kymmene Baa2/BBB

CMPC

Baa2/A-

Stora Enso Baa3/BBB-

Operating margin – 2006

%

EBITDA1 / Net interest – 2006 Total Debt / EBITDA (1) – 2006


IP Baa3/BBB

Arauco Baa2/BBB+


CMPC

Baa2/A-



IP Baa3/BBB

Arauco Baa2/BBB+


CMPC

Baa2/A-



IP Baa3/BBB

Arauco Baa2/BBB+


CMPC

Baa2/A-


13,6 11,9

39,4

16,7

22,9

12,77,8 6.6

30,4

5.3

13.4

4.3

Top Ten Global Forest, Paper and Packaging Industry Companies in terms of Net Income

Source: Global Forest, Paper and Packaging Industry Survey, PriceWaterhouseCoopers

6.82.112.21311.6331.191325FinlandUPM210

8.012.91.1671.345227341BrazilAracruz89

10.39.81.5281.576362354USPlum Creek68

3.04.210.91710.762289394JapanOji Paper77

1.4-0,15.3775.061-78433FranceSequana Capital106

11.38.52.0752.374590438ChileArauco45

13.316.32.8492.599386456USLouisiana-Pacific54

3.95.023.35924.097-351.100USInternational Paper93

17.121.310.71811.8909901.265USProcter & Gamble32

14.213.915.08315.9031.8001.568USKimberly-Clark11

200420052004200520042005Name`04`05

RoceSalesNet IncomeCountryCompany Rank

0

271

387300

400

125187

166

5

4

138

0

100

200

300

400

500

600

700

800

900

1,000

1,100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Bonds Bank loans

Consolidated amortization schedule of long term debt

US$ MM (December 2006)

Average last two years EBITDA: US$1,009 MM

Arauco has a conservative debt maturity profile

Paraguay

Uruguay

Bolivia

Peru

Colombia

Venezuela

Guyana

Suriname

FrenchGuyana

Saw Mill

Forests

Pulp Mill

Head Offices

Port

Panel mill

CHILE

Santiago

Valdivia

AraucoCholguán

Constitución

ARGENTINA

Buenos Aires

AltoParaná

BRASIL

Ecuador

Colombia

Ecuador

Pulp PanelsForestry Sawn timber

5 mills

2.7 million tons

13 sawmills

3.28 million m3

709,435 Hectares

( 1.75 million acres)

4 facilities

Plywood: 580 Th m3

MDF: 515 Th m3

Hardboard: 60 Th.m3

2 sawmills

470,000 m3118.922 hectares

( 294 Th acres)

6 mills3.0 million tons

15 sawmills3.75 million m3

8 facilities2.32 million m3

1 mill

350 Th. tons

2 facilities

MDF: 305 Th m3

PB : 260 Th m3

884,296 hectares( 2.18 million acres)

30,612 hectares

( 76 Th acres)

2 facilities

MDF: 305 Th. m3

PB : 298 Th m3

25,327 hectares

( 63 Th acres)

Arauco’ s plantations and production facilities are strategically located

N.Aldea

Arauco has a well diversified EBITDA and sales mix

EBITDA1 by division – 2006

Total = US$1,123 MM(1) Operating income + Depreciation + Stumpage

Sales by product – 2006

Total = US$ 2,850 MMForestry revenues do not include intercompany sales

Sales by region – 2006

Total = US$ 2,850 MM

Arauco has focused on forest management to guarantee the sustainability of its operations

Annual plantations

36

32

38 37 3739 39

4240

1416

20

23 24

2931

33

40

0

5

10

15

20

25

30

35

40

45

1999 2000 2001 2002 2003 2004 2005 2006 2010

Hectares planted Hectares harvested

Th. Hectares Approximate equilibrium point

Pine plantations age breakdown

As of December 2006

Total = 749,247 hectares

Includes plantations in Chile, Argentina, Brazil and Uruguay

2.5

4.7

6.27.0

8.19.0 9.4

10.9

12.5

14.1 14.215.0

0

2

4

6

8

10

12

14

16

1990 1994 1997 1999 2000 2001 2002 2003 2004 2005 2006 2010E

High yielding forest resources increase Arauco’ s competitive advantages

Softwood growth rate

24

15

35 34

24

10

2523

0

5

10

15

20

25

30

35

40

SpruceCanada

SpruceSweden

Southern PineUS

Taeda PineArgentina(Misiones)

Radiata PineChile / New

Zealand

Genetically improved plants Current forests

Cubic meters per hectare per annum

Source: Jako Poyry and Arauco

Harvested wood

Million cubic meters

CAGR: 9.37%

Nueva Aldea Complex

Nueva Aldea: Sawmill

Nueva Aldea: Plywood mill

Foreign Offices

Arauco opened several offices in strategic locations in the late 90’s:

– Atlanta, USA

– The Hague, Holland

– Tokyo, Japan

– Guadalajara, Mexico

– Buenos Aires, Argentina

– Lima, Peru

– Bogota, Colombia

– Curitiba, Brazil

Arauco Wood Products - Atlanta OfficeA R A U C O W O O D P R O D U C T S , I N C .

D a v e P a t c hS a l e s M a n a g e r

1 6 4 4

E r i c B e r l i eS a l e s M a n a g e r , M D F L i d e r

1 6 4 2

J o h n A t k i n s o nS a l e s , P l y

1 6 4 9

N NS a l e s S u p p o r t

J u s t i n L a t o n eS a l e s , M D F , H B

1 6 4 3

D i e g o F i g u e r o aP a n e l s S a l e s M a n a g e r

1 6 4 1

D i e g o d e l a M a z aS a l e s M a n a g e r

1 6 3 2

P a t r i c i a A l m e i d aS a l e s S u p p o r t

1 6 3 3

M a r k Y o u n gL u m b e r S a l e s M a n a g e r

1 6 3 1

N e i l H e f l i nS a l e s M a n a g e r

1 6 3 5

R o b e r t D i r h a mS a l e s M a n a g e r , W e s t R e g i o n

B r e t t P r a t tS a l e s M a n a g e r

P a t F a l l e nS a l e s R e p r e s e n t a t i v e

1 6 3 7

T i m P r u i t tS a l e s R e p r e s e n t a t i v e

1 6 4 7

D a v i d J i m e n e zP l a n n i n g & D e v e l o p m e n t C o o r d i n a t o r

1 6 2 3

S h e l l e y W h i t eS a l e s S u p p o r t

1 6 2 6

M i c h a e l M o r g a nS a l e s R e p r e s e n t a t i v e

1 6 3 8

B o b H o o t s e l l eM . & M i l l w o r k S a l e s M a n a g e r

1 6 3 4

M o n i q u e P r i c eI n v o i c i n g S p e c i a l i s t

1 6 1 4

C a r r o l S t e e l eI n v o i c i n g S p e c i a l i s t

1 6 1 3

N NR e c e p c i o n i s t , A d m i n . A s s i s t

1 6 5 9

D i a n e L y t l eA d m i n i s t r a t i o n M a n a g e r

1 6 1 2

L y n n B u c k l e yC o l l e c t i o n s A s s i s t a n t

1 6 1 7

M a r t h a A r m s t r o n gC o l l e c t i o n s A s s i s t a n t

1 6 2 3

K e n n a N o r f l e e tC o l l e c t i o n s & R i s k S u p e r v i s o r

1 6 2 1

J o s e p h R o d r i g u e zA / P , C l a i m S p e c i a l i s t

1 6 1 9

N i c o l e B o l i c kG / L A c c o u n t a n t

1 6 0 6

S h e l l e y M o n t e l lC o n t r o l l e r

1 6 1 6

C a s a n d r a S a f aO r d e r E n t r y / I n v e n t o r y S u p p o r t

1 6 4 8

J e r e m y G r a n b e r r yO r d e r E n t r y / I n v e n t o r y S u p p o r t

1 6 2 5

C r i s t i a n D i a zO r d e r E n t r y / I n v e n t o r y S u p p o r t

1 6 4 6

J e r r y P f e u f f e rL o g i s t i c & P l a n n i n g S u p e r v i s o r

1 6 4 0

A l e x G o n z a l e zL o g i s t i c C o o r d i n a t o r

1 6 2 9

B r e n t R o g e r sL o g i s t i c C o o r d i n a t o r

1 6 1 8

M i c h a e l V i n c e n tO p e r a t i o n s S u p e r v i s o r

1 6 2 8

D a v i d H e r s h b e r g e rO p e r a t i o n s & L o g i s t i c s M a n a g e r

1 6 2 2

S a n d r a H o r t aI T & S y s t e m s D e v e l o p m e n t A d m .

1 6 2 4

P a b l o G u z m a nD i r e c t o r o f F i n a n c e & O p e r a t i o n s

1 6 1 1

E r w i n K a u f m a n nG e n e r a l M a n a g e r

1 6 1 0

Atlanta Office - Cultural Issues

Different attitude at work !

– Chilean more direct, more “aggressive”, rough. American more “relationship oriented”, more polite.

– In general, US companies are warmer, also outside the office. More activities on weekends, events, etc. Chilean normally don’t have a relationship with colleagues outside the office.

– Chilean normally show more commitment to the company, stay until (very) late or also work on weekends if necessary.


Different concept of success !

– American spend their money because it’s “good” to have money. Chilean need to show “poverty” (because of religion?, because of opportunities? economic conditions?).

– For American it’s good to be successful. Chilean like to be, but other don’t like you to be successful (“employee of the month” will not work in Chile).

– Chilean see the “bad” things, American see the “good” things


Different business styles ?

– Not too many “business concept” differences between Chile and USA. Business based on commitment. This is not always assured in other Latin-American countries.

– The quality of the education is very similar in management levels.

– It’s very easy to make business between a serious Chilean company and a serious American company. This has been very important for the success of the Chilean economy.


Why need Chilean in the US office ?

– Same language, communication style, company language, “codes”.

– Confidence

– To keep and transmit the company’s culture (productivity, volume, cost, margin, margin per hour, etc).

Economy & Finance

Arauco Presentation For Wssu