Group has completed four acquisitions in just over a year — two in Brazil, one in Mexico, and one in the United States
08/22/2023
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Francisco Ruiz-Tagle — Foto: Divulgação
With four acquisitions completed in just over a year — two in Brazil, one in Mexico, and one in the United States — the Chilean group CMPC is now focusing on consolidating these assets into its structure. However, it will not fail to evaluate any opportunities that may arise in the different markets in which it operates, while integrating the new operations and preparing for the inauguration of the BioCMPC project in Rio Grande do Sul.
“The central point is to consolidate the acquired assets, but we continue to monitor the opportunities,” said Francisco Ruiz-Tagle, CEO of Empresas CMPC, who was in Brazil last week to attend the 18th Latin American Conference of Fastmarkets Forest Products.
The group’s name is often mentioned among potential suitors when forest-based assets come up for sale in the region, and its appetite has been strong in recent years. Among its most recent purchases, in April last year, CMPC took over the Iguaçu Celulose e Papel mill for R$946 million, making its debut in the Brazilian packaging market. The following month, Softys, the group’s tissue and personal care division, announced the acquisition of Rio de Janeiro-based Carta Fabril for R$1.14 billion.
Last May, Softys completed a new acquisition, the Mexican company MABE, for $265 million. In June, CMPC agreed to buy Powell Valley Millwork, which specializes in the manufacture of panels, frames, and other wood products, for about $40 million, which became its first industrial operation in the United States.
“We have a well-defined strategy that combines organic and inorganic growth,” he said. Asked about the group’s geographic expansion plans, Mr. Ruiz-Tagle said CMPC is a regional company with operations in Latin America and now the United States. But it reaches 50 countries through exports.
With $5.5 billion already invested in Brazil, CMPC has dedicated R$2.75 billion to the BioCMPC project, which will increase the eucalyptus pulp production capacity of the Guaíba mill, in Rio Grande do Sul, by 350,000 tonnes, making it the most sustainable mill in the group — and one of the most sustainable in the world. Operations are scheduled to start on November 1.
According to Mr. Ruiz-Tagle, the project reflects one of the group’s key beliefs: it is not enough to have access to wood at a competitive cost, it is necessary to invest in operational efficiency and sustainability to remain among the biggest and best in the industry. “Pulp is a product of the future because it brings sustainability to the world and its demand will grow,” he said.
Despite being one of the world’s lowest-cost producers, CMPC, like its peers, felt the impact of the pulp price adjustment. In the second quarter, the company posted consolidated sales of $2 billion, up 2% year-over-year, with tissue helping to offset weaker pulp results. EBITDA fell by 51% to $288 million due to lower pulp prices and higher production costs, resulting in a 45% lower profit of $125 million.
Mr. Ruiz-Tagle said that the general weakness in global demand amid higher inflation and a lack of new growth projects in the sectors that consume the raw material is more worrisome than the additional pulp supply. Cost inflation, in turn, affects margins and costs. “There are a lot of uncertainties on the horizon,” he said when asked about expectations for the second half of the year.
Currently, CMPC has no new pulp mill projects and is prioritizing reforestation. In Brazil in particular, the restriction on land purchases by foreigners, which is still under discussion in Brasília, could be an obstacle to new investments by the group, he said. “But CMPC doesn’t want the land, it wants the fiber [wood],” he said.
*Por Stella Fontes — São Paulo
Source: Valor International