This article first appeared on GuruFocus.
Adjusted EBITDA: Exceeded $1 billion, up more than 30% year-on-year and close to 18% quarter-on-quarter.
EBITDA: Exceeded $1 billion, up 44% year-on-year and almost 20% quarter-on-quarter.
Net Income: $440 million for the quarter, up 92% year-on-year.
Energy EBITDA: More than $600 million, significantly up year-on-year and slightly up quarter-on-quarter.
Forestry EBITDA: Recovered 58.9% quarter-on-quarter, including the stumpage effect of a forestry asset sale.
Pulp EBITDA: $206 million for the quarter, compared with $194 million in the preceding quarter.
Wood Products EBITDA: Recovered to $113 million from $84 million in the first quarter.
Copec EBITDA: $452 billion for the quarter, comparing well with the second quarter of 2025.
Terpel EBITDA: $509 billion, comparing well with the second quarter of 2025 and in line with the first quarter of 2026.
Abastible EBITDA: CLP74 billion, stemming from an increase in operating income due to higher volumes.
CapEx: $920 million, mostly devoted to the Forestry division.
Net Financial Debt-to-Adjusted EBITDA: 3.30 times.
Total Debt: $13 billion, with total cash of almost $3 billion, yielding a net debt of $10.4 billion.
EBITDA Margin: 9.7%.
Return on Capital Employed: 9%.
Forestry Net Income: $121 million for the quarter.
Forestry Asset Sale: Sale of eucalyptus forests for 29,500 hectares for $217 million, yielding a stumpage effect of $124 million.
Puerto Coronel Stake Sale: Sale of 50% stake for $65 million, with a pretax gain of $26 million to be recorded in the third quarter.
Bond Issuance: Issued bonds for $260 million with 10- and 20-year maturities at rates of 3.34% and 3.46%, respectively.
Copper Segment EBITDA: $287 million for the quarter, with a cash cost of $1.59.
Copec Volumes: Decreased 6.6% year-on-year due to higher prices.
Abastible Volumes in Colombia: Increased 36.5%.
Abastible Market Share in Chile: Increased 29.4%.
Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Empresas COPEC SA (XSGO:COPEC) reported a strong quarter with adjusted EBITDA exceeding $1 billion, up over 30% year-on-year and 18% quarter-on-quarter.
The Energy division delivered a record performance, with EBITDA of over $600 million, driven by favorable inventory valuation effects, strong industrial margins, and robust performance across Latin American geographies.
The Forestry division showed a significant recovery, with EBITDA up 58.9% quarter-on-quarter, boosted by a $124 million stumpage gain from the sale of eucalyptus forests.
The Sucuri project in Brazil is progressing well, reaching 74.5% completion, which is 6.4% ahead of schedule, and remains on track to start operations in Q4 2027.
The company successfully issued $260 million in bonds with very favorable rates (3.34% and 3.46%) and strong demand, which will help smooth out its debt maturity profile.
The Wood Products division rebounded strongly, with EBITDA increasing to $113 million from $84 million in the prior quarter, driven by higher panel volumes and prices.
Negative Points
Pulp markets face a challenging environment in China due to weak demand for printing/writing and tissue, leading to high inventory levels and potential downward pressure on prices.
The company’s net financial debt-to-adjusted EBITDA ratio remains elevated at 3.30 times, partly due to the hybrid bonds issued by Arauco.
Volumes in the Energy division were negatively impacted by higher prices, with a 6.6% year-on-year decrease in Copec’s fuel volumes.
The fishing division (Ihmour) reported a higher loss compared to last year, primarily due to lower catches in the fishing sector.
Costs in the pulp division have been trending upward due to disruptive logistics and maintenance activities, which could pressure future margins.
The company’s credit metrics are at historically high levels, and the equity support agreement for Arauco, while providing a safety net, highlights ongoing financial strain within the subsidiary.
Q & A Highlights
Q: How much of the EBITDA improvement in Copec fuels came from inventory effects versus trading and better fuel performance, and what can we expect in the second half?A: Rodrigo Alvarado, CFO of Empresas Copec, explained that while the Energy division has a strong commercial performance trend, the recent quarterly EBITDA of $500-$600 million, compared to a historical $300-$400 million, includes exceptional effects. The roughly $150 million per quarter difference stems from inventory revaluation effects due to rising oil prices and additional industrial margins. He noted that part of this may revert if prices decline, but the portion related to serving large industrial customers in a volatile environment could be more permanent, depending on future oil market trends.
Q: Does the sale of forestry assets involve any future commitment, or is it simply an outright sale of timber?A: Gianfranco Truffello, CFO of Arauco, clarified that the sale of ~29,500 hectares of eucalyptus forests in the Valdivia area for $255 million (including VAT) was an outright sale to a fund with no signed buy-back commitment. However, Arauco intends to negotiate an option to buy the fiber back in the future, as the company’s mills in the same zone will need it. The fiber sold is scheduled for harvest in two to three years, so current operations are unaffected.
Q: What is the expected steady-state cash cost for the Sucuri project delivered to China?A: Gianfranco Truffello stated that Sucuri, being a state-of-the-art mill and the largest in the world, is expected to have a very competitive cash cost. He projected that by year three or four of operations, cash costs should be lower than those at the company’s other mills, reaching between $200 and $240 per ton delivered to China. This will depend on the price and mix of wood used, but the mill should be among the most competitive globally.
Q: Which triggers should activate the equity support from Empresas Copec to Arauco, and what alternatives are available?A: Gianfranco Truffello explained that the Equity Support Agreement (ESA), pending shareholder approval, has triggers based on the evolution of Arauco’s credit metrics, designed to maintain an investment-grade rating. Any deterioration or slower-than-expected recovery to normal levels would trigger additional capital injections. Rodrigo Alvarado added that this is a standby facility, not an outright equity injection, intended to provide flexibility and accelerate convergence towards investment-grade stand-alone credit metrics.
Q: With more integration in China and softening demand, do you see China increasing paper exports, and when will high wood costs hit local production?A: Gianfranco Truffello noted that fiber prices and import volumes in China have increased due to local production ramp-ups, with supply limitations from Indonesia and weather-related events adding pressure. He believes hardwood pulp prices have reached a bottom, supported by local pricing being higher than import prices, and expects seasonality to help in the coming months. For softwood, high inventory levels make the market more difficult, but he sees a floor at current prices. He expects Chinese paper exports to continue.
Q: Can you provide more detail on the performance of the Wood Products division and its outlook?A: The division showed a strong recovery with EBITDA of $113 million in Q2 2026, up from $84 million in Q1, driven by significant increases in panel volumes and solid wood volumes. In North America, MDF demand is stable but prices are pressured by high supply and rising costs. Particleboard is performing well with solid demand and increasing prices. In Latin America, Brazil has a positive outlook for MDF, while Chile shows mixed demand. The division is expected to yield a yearly EBITDA of around $500 million.
Q: What were the main drivers behind the strong performance in the Energy division, particularly in Colombia and Peru?A: The Energy division’s strong performance was driven by favorable industrial margins, inventory revaluation effects, and sustained growth in the lubricants business. In Colombia, volumes increased by 36.5% due to natural gas substitution and high consumption. Peru performed well in the bottled gas segment with strong positioning and margins, though the industrial segment was affected by El Nino weather conditions impacting the poultry industry. Ecuador also showed higher volumes and margins, substituting other energy sources.
Q: What is the status of the Sucuri project and its expected start of operations?A: The Sucuri project reached 74.5% physical progress by the end of July, 6.4% ahead of schedule, with over 14,000 workers on site. Engineering, procurement, and civil construction are over 90% complete. The recovery boiler lifting was completed one month ahead of schedule, and the power line commissioning was completed two months early. Electromechanical setup is at 32% progress, 12% ahead of schedule. The project remains on track to start operations in Q4 2027.
Q: Can you elaborate on the recent bond issuance by Empresas Copec and its purpose?A: Rodrigo Alvarado detailed that Empresas Copec issued bonds for $260 million, purely for refinancing purposes. The issuance included two series with 10- and 20-year maturities at rates of 3.34% and 3.46%, respectively. The demand was strong, reaching almost two times the amount offered for both series. The spreads were among the lowest of the year for Copec, allowing the company to continue smoothing out its debt maturities.
Q: What is the outlook for pulp prices and market conditions in the second half of 2026?A: Gianfranco Truffello indicated that the market in China remains challenging with weak demand for printing/writing and tissue, and high inventory levels. However, he believes hardwood pulp prices have reached a bottom, supported by local pricing being higher than import prices. In Europe, demand is solid, with some price increases for hardwood. Softwood pulp faces more difficulties due to high inventory, but prices are expected to find a floor. The gap between Europe and China prices could lead to adjustments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.