Empresas Copec S A : Press Release 2Q23

2Q23 Earnings Release	2Q23 Results Webcast
Wednesday, August 23th, 2023
	11:00 EST (NY Time)
August 17th, 2023	11:00 Santiago Time
	Please register at:
	investor.empresascopec.cl

EBITDA

2Q23 / 2Q22

2Q23 / 1Q23

2023 / 2022

Highlights

Net Debt/

EBITDA

EBITDA in 2Q23 was US$ 441 million, which compared to 1Q23 and 2Q22 represents a drop of 28.4% and 56.0%, respectively, as a consequence of lower results in the forestry and energy sectors.

A profit of US$ 59 was recorded in the quarter, which compares negatively with the profit of US$ 382 million reported in 2Q22. This is explained by a lower operating result in the forestry sector, due to a drop in prices and higher pulp costs, added to decreased volumes of panels and timbers. Meanwhile, the energy sector recorded declines, explained by Copec Chile and Terpel, as a result of lower volumes, a negative inventory revaluation effect and a drop in the industrial margin.

Profit decreased US$ 96 million compared to the previous quarter, as a result of lower operating results in the forestry business, associated with lower pulp, panels and sawn timber prices, together with higher costs of bleached hardwood and bleached softwood. This was offset by an increase in pulp, panels and sawn timber volumes. Meanwhile, the energy sector also showed a decline, due to a lower result in Copec Chile and Terpel.

Profit decreased 78.7% compared to 2022, due to lower operating and non-operating income. The forestry sector fell as a result of a drop in volumes and prices in the pulp and wood products business. The energy sector recorded a lower operating income due to a drop in the results of Copec Chile and Terpel, explained by a decrease in margins. This was partially offset by a better operating result in Abastible.

Fitch Ratings and S&P ratifie Empresas Copec on its BBB rating and stable outlook. MAPA reached 325 thousand tons produced as of July 2023. Regarding ESG, Arauco issued sustainable bonds and Copec becomes a majority shareholder in Ampere Energy. In addition, Copec's Wind Ventures was highlighted as the best Venture Capital in Chile.

At the end of 2Q23, the level of indebtedness reached 3.5x, which compares with the 2.7x and 1.9x reported in 1Q23 and 2Q22, respectively. The increase during the last quarter is explained by a lower EBITDA generated during the last twelve months, due to a drop in the forestry and energy businesses, and a higher level of net debt.

	2Q 23	1Q 23	2Q 22	2Q23 / 2Q22	2Q23 / 1Q23	Accum 23	Accum 22	Chg. 23 / 22
Revenues	7.070	7.500	7.392	(4,4%)	(5,7%)	14.570	14.178	2,8%
EBIT	73	338	681	(89,3%)	(78,4%)	411	1.344	(69,4%)
EBITDA*	441	616	1.004	(56,0%)	(28,4%)	1.058	1.944	(45,6%)
Adjusted EBITDA**	535	515	1.018	(47,4%)	3,9%	1.050	2.088	(49,7%)
Non operating income	(13)	(189)	(114)	88,6%	93,1%	(202)	(40)	(409,7%)
Total profit	64	165	403	(84,0%)	(60,9%)	229	1.045	(78,1%)
Profit attributable to controllers	59	155	382	(84,7%)	(62,2%)	214	1.001	(78,7%)
Profit attributable to minority	6	10	22	(72,5%)	(38,9%)	16	44	(64,2%)
EBITDA Margin	6,2%	8,2%	13,6%	(54,0%)	(24,1%)	7,3%	13,7%	(47,1%)
Net Debt / EBITDA	3,5	2,7	1,9	80,5%	26,4%	3,5	1,9	80,5%
Figures of 1Q22, 2Q22, 1Q23 and 2Q23 are presented net of Mapco's EBITDAs, which amount to US$ 16 million, US$ 24 million, US$ 13 million and US$ 21 million, respectively
					Figure of 1Q23 includes adjustment for non-operating depreciation
				* EBITDA = Operating Income + Depreciation + Amortization + Fair value cost of timber harvested
								Figures in US$ million

Contact information:

Cristián Palacios	Olivia Tafra	Isidora Nario
Director of Finance and IR	Investor Relations	Investor Relations
[phone]	[phone]	[phone]
[e-mail]	[e-mail]	[e-mail]

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SIMPLIFIED OWNERSHIP STRUCTURE

HIGHLIGHTS

MAPA's update

MAPA's sales volumes have increased in the last months, along with a positive response from clients.

Production continues to increase as expected, without significant problems, reaching approximately 325 thousand tons as of July 31, 2023, of which, 82.1% or 267 thousand tons were prime pulp. Full capacity is expected to be achieved in the first quarter of 2024.

Valdivia mill resumed operations

On August 8, the Valdivia pulp mill resumed operations, after the fire that damaged the drying machine on May 26, 2022, which caused the stoppage of its operations for 3 months in 2022 and 4 months in 2023. In addition, a portion of the compensation was received from the insurance company on June 30 and it is expected to receive more during 2023.

The Valdivia Mill has an annual production capacity of 550 thousand tons of dissolving pulp. In addition, the Valdivia Mill produces renewable electricity, feeding significant surpluses into the National Electric System.

Closure of Horcones II sawmill

On July 28, Arauco reported the closure of the Horcones II sawmill, due to the difficult situation of the timber business in Chile.

The Horcones II sawmill is located in the Arauco Region, was built in 1999 and began operations in the year 2000. It specializes in the production of thin logs and the supply of raw material for the production of pallets. The facility had a capacity of 300 thousand m3 of sawn timber, which represents 10% of the total capacity of this product for Arauco.

Terpel successfully completes bonds issuances

On July 27, 2023 Terpel issued bonds for a total amount of COP 418,723 million, with the following characteristics:

1. Series C5, amounting to COP 106,973 million, 5 years maturity and a rate of CPI + 5.14%.
2. Series C15, amounting to COP 311,750 million, 16 years maturity and a rate pf CPI + 5,29%.

These bonds have AAA credit rating, the highest by Fitch Ratings Colombia, ratifying Terpel's leadership and financial strength.

The proceeds from the issuance will be used for debt refinancing.

Fitch Ratings and S&P ratifies Empresas Copec's BBB rating with stable outlook

The rating agencies maintained Empresas Copec's local (AA) and international (BBB) ratings, with a stable outlook.

This rating reflects a healthy credit profile, as well as the strong business position of its main subsidiaries Arauco, Copec and Abastible, among others.

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ESG HIGHLIGHTS

Arauco issued sustainable bonds in the local market

During the second quarter of 2023, Arauco issued three Sustainable Bonds in the local market, with the following terms:

1. On April 25: series Y, for 2 million Unidades de Fomento (UF, Chile's inflation-indexed currency), 9 years maturity and a rate of 3,1% annual.
2. On April 25: series Z, for 5 million UF, 21 years maturity and a rate of 3,2% annual.
3. On June 13: series AB, for 5 million UF, 23 years maturity and a rate of 3,2% annual.

These series have a Chilean credit rating of AA/Stable, according to Fitch Chile and Feller Rate.

The proceeds of the placements will be used for general corporate purposes of the Company and/or its subsidiaries.

The aforementioned bonds are classified as "sustainable", since regardless of the destination of the proceeds, Arauco will allocate an equivalent amount to one or more green projects selected for the purpose of this issuance in accordance with the "Sustainability Bond Framework" subscribed by the company and published on its website.

Green and social projects may include: (i) projects with disbursements made within 36 months prior to the date of issuance of the bonds and (ii) projects with disbursements made after the date of issuance of the bonds and up to the maturity date of the bonds.

Copec becomes majority shareholder of Ampere Energy

Copec announced the control of the company Ampere Energy, leader in the field of smart energy storage in Spain, which is expanding its geographic presence in Latin America and other markets.

Copec entered the Valencia-based firm in the second half of 2019, by acquiring 13.5% and now reaches a 65.2% share. The acquisition has the goal to accelerate energy transition process and expand its international positioning in the sector.

Abastible's Roda-e enters the Peruvian market

Abastible's subsidiary, focused on providing integrated solutions in energy efficiency, renewable energy and sustainability, announced the expansion of its operations in Peru, from where it will be able to continue consolidating its presence and contribution to the energy transition in the region.

The announcement took place during the seminar "Energy transition 2023" organized by Solgas, a meeting that addressed trends and best practices in sustainable and efficient supply, with the participation of national and international companies and organizations.

Copec's Wind Ventures awarded as the best Corporate Venture Capital in Chile

The survey, conducted by CIE Innovación ESE Business and El Mercurio's Innovation section, analyzed 36 CVC's investment strategies, policies and processes, highlighting those with the greatest maturity in their fund. In addition to leading the overall ranking, WIND also led the Energy sector.

The study highlights its strategic focus and commitment to Copec's transformation, being able to identify and support companies that are at the forefront of trends in energy, mobility and convenience, generating a positive economic and social impact in the countries where the subsidiary operates.

WIND Ventures is focused on driving innovation in the New Energy, New Mobility and New Convenience sectors. Since its creation in 2019, it has invested more than US$100 million in 22 startups nationally and internationally.

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CONSOLIDATED RESULTS

2Q23 / 2Q22. In the second quarter of 2023, income attributable to owners of the controlling interest, net of minority interests, reached US$ 59 million, lower by US$ 323 million compared to the result recorded in the second quarter of 2022. This is explained by a drop of US$ 608 million in the operating income and is partially offset by a higher non-operating income of US$ 101 million.

In the forestry sector, Arauco recorded a decrease in operating income, due to a drop in pulp, panels and sawn timber prices, together with a drop in volumes in the two latter businesses. The foregoing is added to cost increases for all fibers, partly associated with the start-up of MAPA. All this was partly offset by an increase in panel and sawn timber sales volumes.

The lower operating income in the energy sector is explained by a decrease in the results of Copec Chile and Terpel. This is mainly related to higher distribution costs, together with a drop in margins in Copec Chile and Terpel, associated to a negative inventory revaluation effect, a drop in the industrial margin and a decline in volumes. Meanwhile, Abastible reported higher operating income compared to the previous year, reflecting an improvement in the performance of its operations in Chile, Colombia and Peru. This was partly offset by a lower performance in Ecuador.

The Company's gross profit decreased 42.1%, reaching US$ 797 million. This was mainly contributed by affiliates Copec, with US$ 406 million; Arauco, with US$ 213 million; Abastible, with US$ 107 million; Igemar, with US$ 54 million; and Sonacol, with US$ 11 million.

Non-operatingincome was favorable compared to that reported in the second quarter of 2022 due to an increase in other income, associated to a compensation of insurance due to the fire in the Valdivia plant and higher equity earnings of associates, partially offset by higher net financial costs. In addition, there is an increase in earnings from discontinued operations, due to an increase in Mapco's results.

Income Statement	2Q 23	1Q 23	2Q 22	2Q23 / 2Q22	2Q23 / 1Q23	Accum 23	Accum 22	Chg. 23 / 22
Revenues	7,070	7,500	7,392	(4.4%)	(5.7%)	14,570	14,178	2.8%
Cost of sales	(6,273)	(6,549)	(6,016)	(4.3%)	4.2%	(12,822)	(11,505)	(11.4%)
Administration & distribution expenses	(724)	(613)	(695)	(4.2%)	(18.0%)	(1,337)	(1,329)	(0.7%)
Operating Income	73	338	681	(89.3%)	(78.4%)	411	1,344	(69.4%)
Other income	169	85	103	63.1%	98.6%	254	194	30.5%
Other expenses	(59)	(220)	(70)	15.5%	73.1%	(279)	(107)	(160.4%)
Other gains (losses)	(4)	(6)	(1)	(466.6%)	28.9%	(10)	(1)	(805.1%)
Financial cost	(177)	(155)	(92)	(92.9%)	(13.8%)	(332)	(177)	(87.3%)
Financial revenues	41	36	22	82.1%	13.6%	76	39	94.4%
Share of profits of associates	66	69	(26)	350.0%	(4.6%)	135	62	119.4%
Foreign exchange differences	(42)	18	(24)	(78.5%)	(334.0%)	(24)	(12)	(107.8%)
Other results	(7)	(17)	(28)	76.3%	60.5%	(23)	(38)	39.6%
Non Operational income	(13)	(189)	(114)	88.6%	93.1%	(202)	(40)	(409.7%)
Income tax expense	(2)	15	(173)	99.0%	(111.2%)	14	(309)	104.4%
Profit from discontinued operations	6	1	9	(33.2%)	783.5%	7	49	(85.8%)
Total profit	64	165	403	(84.0%)	(60.9%)	229	1,045	(78.1%)
Profit attributable to controllers	59	155	382	(84.7%)	(62.2%)	214	1,001	(78.7%)
Profit attributable to minority	6	10	22	(72.5%)	(38.9%)	16	44	(64.2%)
EBIT	73	338	681	(89.3%)	(78.4%)	411	1,344	(69.4%)
Depreciation & Amortization, and adjustments	247	193	201	23.1%	27.9%	440	399	10.3%
Fair value cost of timber harvested	121	85	123	(1.0%)	42.6%	206	201	2.8%
EBITDA	441	616	1,004	(56.0%)	(28.4%)	1,058	1,944	(45.6%)
							Figures in US$ million

4

2Q23 / 1Q23. Profit decreased by US$ 96 million compared to the previous quarter, explained by a lower operating income, partially offset by a higher non-operating income.

The forestry sector decreased its EBITDA by 45.0%, as a result of lower pulp, panels and sawn timber prices, added to higher bleached hardwood and bleached softwood costs, partly offset by lower unbleached softwood costs.

The energy sector decreased its EBITDA by 20.2% measured in dollars, explained by decreases in Copec of 30.4%, offset by an increase of 44.3% and 3.4% in Abastible and Sonacol.

Non-operating income was less unfavorable by 93.1% due to an increase in other income from insurance compensation at the Valdivia Mill, and a decrease in other expenses, associated with plant closure and forestry fires that took place in the first quarter of 2023.

2023 / 2022. In the forestry sector, Arauco reported a drop in operating income as a result of lower volumes and prices in the pulp and wood businesses. It should be noted that there were cost increases associated, in part, with the start-up of MAPA. This was partially offset by lower distribution costs.

The lower operating income in energy is explained by a decrease in the results of Copec Chile and Terpel. This is mainly explained by lower margins in both companies, associated with a negative inventory revaluation effect and a drop in industrial margins in Chile. Meanwhile, Abastible acknowledged a higher operating income compared to the previous year, reflecting an improvement in the performance of its operations in Chile, Colombia and Peru.

Non-operatingincome was unfavorable compared to the first half of 2022, due to an increase in other expenses as a result of plant stoppages and claims in Arauco. In addition, there were higher financial costs in Arauco and Copec.

Thus, the Company's gross profit decreased 34.6%, reaching US$1,749 million. This was mainly contributed by the affiliates Copec, with US$ 828 million; Arauco, with US$ 619 million; Abastible, with US$ 193 million; Igemar, with US$ 92 million; and Sonacol, with US$ 22 million.

It should be noted that Mapco has been reclassified as an asset held for sale for all periods presented. Its contribution to the result is presented in the line profit from discontinued operations.

EBITDA

Net Income

	975
883	902

693

573 468

315

	*	1,007
*	1,004
940

679

734

			619
	*	478	474
616
		382
		340
	*
	441

229

155

	98	118
	59
-32		-9

*Figures of 1Q22, 2Q22, 1Q23 and 2Q23 are presented net of Mapco's EBITDAs,	Figures in US$ million
which amount to US$ 16 million, US$ 24 million, US$ 13 million and US$ 21
million, respectively.
Figure of 1Q23 includes adjustment for non-operating depreciation.

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