Earnings call transcript: CMPC Q3 2025 sees mixed earnings, stock rises

Empresas CMPC reported its Q3 2025 financial results, revealing a mixed performance with earnings per share (EPS) slightly missing forecasts but steady revenue aligning with expectations. The company’s EPS came in at $0.0135, falling short of the anticipated $0.0148, marking an 8.78% miss. Despite this, the company’s stock rose by 3.22% in after-hours trading, closing at 1,378, up from 1,335. The revenue was steady at $1.87 billion, matching forecasts.

Key Takeaways

• EPS missed expectations by 8.78%, but revenue aligned with forecasts.
• Stock price increased by 3.22% in after-hours trading.
• Total Q3 sales reached $1.9 billion, with significant contributions from the Softis segment.
• The company completed a strategic acquisition in Brazil.
• CMPC anticipates a recovery in pulp prices and aims for improved margins in Softis.

Company Performance

CMPC’s Q3 2025 performance showed resilience despite an EPS miss. The company’s total sales reached $1.9 billion, with the Softis segment contributing $873 million. The company’s pulp production increased by 4% year-over-year, highlighting its operational strength. However, the company faced challenges such as rising operating costs and a weak demand in global boxboard markets.

Financial Highlights

• Revenue: $1.9 billion (steady with forecasts)
• EBITDA: $260 million
• Net income: $34 million
• Net debt: $5.1 billion
• Net debt-to-EBITDA ratio: 3.79x

Earnings vs. Forecast

CMPC’s EPS was $0.0135, missing the forecast of $0.0148 by 8.78%. This miss contrasts with steady revenue, which met the forecast of $1.87 billion. The EPS miss was notable but did not significantly impact investor sentiment, as seen in the stock price increase.

Market Reaction

Following the earnings release, CMPC’s stock rose by 3.22% in after-hours trading. The stock’s performance, which increased to 1,378 from 1,335, reflects investor confidence in the company’s strategic initiatives and future outlook. This movement also positions the stock closer to its 52-week high of 1,740.

Outlook & Guidance

CMPC is optimistic about a recovery in pulp prices and aims for 15% margins in its Softis segment by late 2026 or early 2027. The company is also exploring asset monetization opportunities and has scheduled an Investor Day for December 9th to discuss future strategies.

Executive Commentary

Francisco Ruiz-Tagle, CEO, emphasized the company’s strategic focus, stating, "We are considering when we are ready to present this to the board for a final approval." Guilherme Viesi, Chief Commercial Director, noted, "We have seen definitely some curtailment taking place during Q3," highlighting market challenges.

Risks and Challenges

• Rising operating costs: Increased 1.5% QoQ and 3% YoY.
• Weak demand in boxboard markets: Global market challenges persist.
• Excess capacity in tissue markets: Particularly in Mexico and Brazil.
• Increasing wood chip prices: Notable in China, impacting cost structures.
• High net debt: Standing at $5.1 billion, affecting financial flexibility.

Q&A

During the earnings call, analysts inquired about the hybrid bond structure and the feasibility of the Natureza project. Executives addressed market conditions, particularly in the pulp and tissue sectors, and discussed strategies to improve efficiency and cost management.

Full transcript - Empresas CMPC (CMPC) Q3 2025:

Sebastián Moraga, CFO, CMPC: Hello everyone, I’m Sebastián Moraga, recently appointed as CFO of CMPC. I would like to welcome you to our third quarter 2025 earnings webinar. Joining me today are Francisco Ruiz-Tagle, CEO of CMPC; Gonzalo Darraidou, CEO of Softis; Guilherme Viesi, Chief Commercial Director of CMPC Pulp; and Claudia Cavada, our Head of Investor Relations. Please note that statements made today during the presentation and Q&A may include forward-looking statements to assist you in understanding our expectations for future performance. These statements are subject to some risks that could cause actual results and events materially differ. As the slide shows, in the third quarter of 2025, sales amounted roughly to $1.9 billion, EBITDA was $260 million, and net income was $34 million. The Pulp business generated an EBITDA of $162 million, with an EBITDA margin of 22.5%.

The Softis business reported an EBITDA of $95 million, increasing 16% quarter over quarter and decreasing 13% year on year, with an EBITDA margin of 11%. This business has experienced increased competition in its market, especially in Brazil, where the tissue paper installed capacity has increased substantially. Also, a weaker macroeconomic scenario impacting consumption in several markets, specifically in Mexico and Argentina, has limited the ability to increase prices. BioPackaging reported an EBITDA of $18 million during the period, with a margin of 6.8%. The fluctuations of these three businesses versus previous quarters are highlighted in the slide. In the third quarter, the composition of CMPC sales was $721 million from the pulp business, $873 million from Softis, and $266 million from BioPackaging.

The quarter-on-quarter variation is explained by the sale of a non-core asset in the second quarter of this year for $71 million, corresponding to TENSA, the electricity transmission line. At business level, pulp decreased 5% quarter on quarter on lower international price of pulp, while Softis increased 7% on better volumes and FX variations. BioPackaging increased 4% on higher sales volume. The year-on-year variation reflects a 16% drop in pulp sales, explained by a lower average price, which was partially offset by a higher volume. In BioPackaging, a 4% drop was recorded as a result of a lower average price, and in the case of Softis, a 3% increase was observed, explained by a higher sales volume accompanied by a lower average price in US dollar terms. Operating costs increased 1.5% quarter over quarter and 3% year over year.

Operating costs increased both quarterly and yearly, mainly due to higher sales volumes in Pulp and Softis. Other operating expenses amounted to $335 million in the third quarter, increasing 3% quarter on quarter and 5% year on year. Both variations were related to higher expenses in Softis and to a lesser extent in BioPackaging. This was partly offset by lower expenses in the Pulp business. Given the aforementioned effects, on a consolidated basis, the company’s third quarter EBITDA was $260 million, where the contribution of the Pulp segment was 59%, Softis was 34%, and BioPackaging was 7%. Net income totaled $34 million during the period, a decrease from $81 million obtained in the previous quarter and from $147 million obtained in the third quarter of last year. The quarter-on-quarter decrease was driven by a lower EBITDA, explained mainly by the sale of TENSA in the second quarter of this year.

In a year-on-year comparison, the decrease in the net income is largely explained by a lower pulp price. On capital expenditures, in the third quarter, it totaled $176 million, which compares with $327 million reported on the last quarter and to $194 million recorded on the same quarter of last year. The quarter-on-quarter decrease is related mostly to the acquisition of Falcon’s Personal Care Operations in Brazil for an amount of $124 million. Now, I’d like to turn the presentation over to Claudia, who will provide more details on our results by business.

Claudia Cavada, Head of Investor Relations, CMPC: Thank you, Sebastián, and good morning, everyone. We will begin with about business. In the third quarter, our total pulp production reached 1,083,000 tons, up 3% quarter over quarter and 4% year over year, mainly due to lower maintenance downtimes in our mills. Breaking this down, hardwood production was 883,000 tons, up 1% quarter over quarter and 5% year on year. Softwood production was 210,000 tons, a 13% increase from last quarter and a 1% decrease from the prior year. These fluctuations reflect as well as our maintenance schedule in our pulp mills. Looking at our sales volumes, total pulp volumes increased by 2% quarter on quarter and 3% year on year. In a quarterly comparison, hardwood volume was up 3%, driven by higher exports to China and Latin America, while softwood volume declined 2%. In a year-on-year comparison, third-party pulp sales volumes grew by 3%.

Hardwood sales were up 6%, driven by higher exports to Europe, Latin America, and the rest of Asia. Softwood sales decreased by 6%, primarily from lower exports to China. On the pricing side, the average sales price for softwood in the second quarter was $689 per ton, a decrease of 5% from last quarter and a 10% decrease from last year. The average sales price for hardwood was $507 per ton, down 8% quarter over quarter and down 26% year over year. As a result, revenues for the pulp business totaled $561 million, decreasing 7% quarter on quarter and 19% year on year. In our forestry business, sales volume was 997,000 cubic meters. This is up 12% quarter on quarter and up 9% year on year, reflecting stronger sales of palmwood, saw logs, some timber, and other forestry products.

Combined, total revenue for our pulp and forestry business was $721 million, down 5% from the previous quarter and down 16% from last year. Next, let’s look at the pulp cash cost per ton. For hardwood, cash costs were $219 per ton, a decrease of 2% quarter on quarter and a 10% decrease year over year. The quarterly decrease was driven by lower cost of chemicals, partially offset by higher cost of energy, wood, and materials. Year on year, all cost lines decreased. Softwood cash costs reached $381 per ton, down 1% quarter on quarter and up 7% year on year. The quarterly decrease was driven by a lower cost of energy, partially offset by higher cost of wood, chemicals, and labor. Year on year, the most significant increase was recorded in chemicals and labor.

The EBITDA for the pulp business was $162 million, marking a 5% decrease quarter on quarter and a 16% decrease year on year. The EBITDA margin was 22.5%. The quarterly year-on-year decrease in EBITDA was mainly due to lower sales price. Next, let’s discuss our Softis business. In the third quarter, Softis revenues totaled $873 million. This is a 7% increase from the second quarter and a 3% increase year on year. Let’s break down the volumes. At tissue paper, volumes increased by 7% quarter on quarter and 5% year on year. Regarding personal care, volumes increased by 6% in the quarterly comparison and by 23% year on year. This growth largely reflects in part the integration of Falcon’s diaper operations in Brazil. In terms of pricing, the average sales price for tissue products was stable quarter on quarter and declined 9% year on year.

This was a result of currency depreciation across Latin America and the competitive market mentioned before. For personal care, the average price increased by 1% quarter on quarter and decreased by 8% year on year, also reflecting the same reasons. Softis EBITDA for the second quarter was $95 million, with a 10.9% margin. This represents a 16% increase from the previous quarter and is a 13% decrease year on year, which was a direct result of the aforementioned foreign exchange fluctuations and market conditions. Next, let’s discuss our BioPackaging business. Sales volume for the quarter increased by 7% from the prior quarter and decreased by 4% year on year. The quarterly improvement was primarily driven by higher sales of boxboard, paper sacks, corrugated paper, and corrugated boxes. The year-over-year decline was due to lower volumes in boxboard.

Our average sales price in US dollars was down, decreasing by 3% quarter on quarter and remained stable year over year. As a result, revenues for BioPackaging totaled $266 million, up 4% Q1Q and down 4% from the third quarter 2024. The quarterly increase was a direct result of the higher sales volume. BioPackaging EBITDA for the third quarter remained stable from the prior quarter and down 31% year on year. This was driven by lower volumes. Our EBITDA margin for the quarter was 6.8%, a decrease from the 7% we saw in the second quarter and the 9.4% from the third quarter of last year.

Francisco Ruiz-Tagle, CEO, CMPC: Thank you very much, Claudia. We ended the third quarter of the year with roughly $5.1 billion of net debt, cash with $914 million. The net debt-to-EBITDA ratio reached 3.79 times, which compares to 3.65 in the last quarter and to 3.3 on the third quarter of last year. Now, I would like to highlight some events that occurred on the third quarter. Hybrid bond issuances. In August, CMPC completed two sustainable hybrid bond issuances, the first in Chile for $400 million, and a few days later, the company issued another $600 million in the US market. Both instruments include the typical features of hybrid bonds, and rating agencies consider half of their value as equity until the first call date. These proceeds will be used to refinance debt, support investments, and fund other corporate purposes under CMPC’s sustainable finance framework.

With that, Claudia, we can now start the Q&A section.

Claudia Cavada, Head of Investor Relations, CMPC: We welcome your questions. In order to participate, just raise your hand or type in the chat box. We have a first question coming from Marcelo Furlan, Itaú. Hello, Marcelo, welcome. Your mic is open.

Marcelo Furlan, Analyst, Itaú: Hi, Claudia. Hi, CMPC team. Thanks for taking my question. I have two, as a matter of fact. The first one is related to capital allocation and financial leverage. You guys reached these 3.8 times net added valuation this year. We know that the company will propose to the board next year the Natureza project. I would like to understand, what does the company think about the flexibility towards free cash flow generation, CAPEX, and the leverage, and also the exploitation of Natureza project? How do you guys see the current situation and how this could affect the decisions of having this project approved by the board next year? This is my first question. My second one is related to pulp prices.

We have seen lately some recent news regarding some softwood mills discussing layoffs in Finland and also some producers opting to make softwood pulp instead of hardwood and so on and so forth. I would like to understand from you guys if you have already seen signs of likely shortage supply for pulp in this month. These are my two main questions here. Thank you.

Francisco Ruiz-Tagle, CEO, CMPC: Thank you, Marcelo. Nice to meet you. My name is Sebastián Moraga. This is my first conference call. I will take the first question. Regarding leverage, yes, we posted the 3.79 this quarter, but as we see an improvement in the performance of the business, driven mainly by a pickup on the pulp prices, we should see a deleveraging of the indebtedness ratio. Now, we are aware that probably this could not be fast enough to converge with our policy. As CMPC disclosed a couple of weeks ago in an interview, the company has been analyzing lately, I would say, opportunities that could be monetized that are embedded in our balance sheet. Just to name probably three of those, we have extensive forestry capacity of more than one million hectares, both in Chile, Brazil, and Argentina.

On top of that, we have the land of those forests that also are in those three countries. We have, I would say, very valuable real estate assets that today have, I would say, a very high attractiveness on housing and commercial, I would say, interests. Our idea is that we are analyzing not only this, but other, I would say, very valuable assets that we have on our balance sheet in order to, first of all, create value, and on the other hand, to monetize them, and that could be a source of, I would say, important liquidity and efficient liquidity. Those are, I would say, what we are those levers are where we are working towards, and we hope to give you some more color and detail, I would say, on our next annual investor meeting, which will take place on December 9 of this year.

Guilherme Viesi, Chief Commercial Director, CMPC Pulp: Okay, Marcelo, good morning. Guilherme here. I’ll take the second question regarding pulp prices and pulp availability. We have seen definitely some curtailment taking place during the Q3, which is not a surprise given the record low prices that we have reached over the past few months. This has triggered some companies that, especially in the northern hemisphere, to generate curtailments on the softwood side, but not limited to the softwood side. We have also seen curtailments happening on the hardwood side. I would add on top of it the severe weather extremes that have been experienced in Southeast Asia, in Vietnam, in China. They have impacted the availability of wood chips, mainly in China.

That has led to an inflation on the price of wood chips, and as a consequence, has allowed prices of pulp to be increased in China since we have touched the bottom during the August season. That combination of factors, very low prices plus inflation in the wood chip costs, has allowed us to improve our prices. It’s the third price increase that we have managed to pass through in China. Obviously, as a consequence, it has led for price increases in Europe and the rest of the world as well. We expect this trend to continue in future months.

Okay. Thank you so much, guys.

You’re welcome.

Claudia Cavada, Head of Investor Relations, CMPC: Thank you, Marcelo. We have a next question coming from Enrique Braga from Morgan Stanley. Enrique, welcome. Your mic is open.

Good morning. Thank you for taking my question. What I want to discuss is regarding the Natureza project. You still want to present the project to the board. I just want to understand, how do you see the feasibility of this project at current pulp prices and the company’s leverage level? If there is a pulp price that would make the project no longer feasible, economically speaking. If we could also discuss, what’s your outlook for the packaging and the tissue market? Thank you.

Francisco Ruiz-Tagle, CEO, CMPC: Thank you, Emerson. Thank you for your question. Regarding Natureza project, yeah, we have been under a deep analysis of the project and engineering studies and preparing the project. My answer to your question is that we at CMPC, of course, consider the scenarios, different scenarios of prices, but our view is a long-term view. My answer to that is that we are really very focused on our project because we see our project as a very, very competitive one. We are considering when we are ready to present this to the board for a final approval. At the moment, we are in the process of having environmental permits and still in progress, and hopefully have that ready during the first quarter of the next year. That is my answer regarding Natureza and connection with BioPackaging.

What we have seen is that in some markets, especially in the case of boxboard, we have been some weak demand, not only in Latin America, but in Europe and other also markets, very much connected with what is happening in general, in the paper business in general, and with the consumption in several countries, weak consumption in several countries, and affected then the demand of boxboard. In case of corrugated boxes, we are mainly in Chile. Actually, we are having a very good year in corrugated boxes and having a good position in our market. In fruits, in wines, in salmon, most of this, or many of this business is used for exporting different kinds of woods. In the case of paper sacks, still, I would say, seeing that industry not in an easy condition because the construction is very much connected with the paper sack business.

Still, we see a room for recovery in several countries. We are mainly in Latin America, and we are not seeing in the near future probably a good moment for that business. Gonzalo, probably about tissue, you can answer that.

Gonzalo Darraidou, CEO, Softis: In terms of tissue, we have different situations according to the markets. If we analyze markets like Chile, Argentina, and Uruguay, we see that it’s very well balanced in terms of demand and capacity. If you analyze Mexico and Brazil, there is still excess of capacity. According to that, because of that, we are totally focused on improving our efficiency costs, logistics, and improving our execution at podium sales. We decided to begin to develop strong marketing programs to reinforce our brand in those markets. For the next year, 2026 and 2027, we see that excess of capacity will maintain in the case of Mexico and Brazil.

Francisco Ruiz-Tagle, CEO, CMPC: Did we answer, Emerson? Sorry, Enrique, your questions.

Yes. That’s all very clear. Thank you very much.

Okay.

Claudia Cavada, Head of Investor Relations, CMPC: Thanks, Enrique. Please recall that you can ask your questions just by raising your hand or typing in the chat box. You will be welcome to do so. The next question comes from Goldman Sachs, Emerson Vieira. Emerson, hello, your mic is open.

Good morning, everyone. Thank you for taking my questions. I have two. The first one on the hybrid debt, I could not find proper information on those instruments. Just want to clarify a few things. First, I mean, the equity portion of the bond is not considered for the reported leverage ratio, right? A second one, for the equity portion, I mean, how do they work? Is there any clause that allows creditors to convert their holdings into CMPC equity? If that is the case, I mean, what would be the conversion rate? Going forward, I mean, is this hybrid debt your preferred mechanism for funding going forward? Just on the tissue business, just a follow-up here. You guys mentioned that excess capacity will remain in 2026, and you have some ongoing initiatives to improve the tissue business costs.

Just to clarify, I mean, looking 2027 onwards, when do you guys expect margins to reach that 15% level that you guys have been talking, I mean, for the past couple of months or years, I would say? That’s it. Thank you very much.

Francisco Ruiz-Tagle, CEO, CMPC: Hi, Emerson. This is Sergio and I will take your first question. First, how is it accounted in our annual report? Yes, we are accounting the 50% equity contribution. We issued $400 million in the domestic market, $600 million in the US market, total hybrid bond of $1 billion, and $500 million, saying 50% of the amount accounts as equity. To your first question, yes, we are considering that in our net debt to EBITDA. The second question is, how does it work? Does it have a conversion rate? No, it does not have a conversion rate. The hybrid bond basically is a long-term instrument, which in this case has a seven-year non-call. In those seven years, it has the feature of having 50% equity. After that, the feature does no longer work.

Now, what it brings, it brings the ability to defer interests if obviously we wish to do. But I can tell you when we considered this instrument, we haven’t at that point, and now we haven’t considered deferring interest payments. I would say in simple terms that those are the main features of the hybrid bond. Now, if it’s the preferred instrument, I would say no. We have many instruments. We always see them across the board. The hybrid instrument is a very interesting one, but it’s not the preferred one. So it’s one of many other instruments available in the financial system.

Sebastián Moraga, CFO, CMPC: Emerson, this is Marcelo.

Gonzalo Darraidou, CEO, Softis: In terms of soft margin, first of all, I want to explain to you that at this moment, we’re developing very strong programs in Brazil, mainly in Brazil and Mexico, in terms of revenue growth management, logistic cost efficiency in our factories, and developing innovation and marketing programs in terms to be very close to the consumer and to our customer looking for new products. All of this program will allow us to reach our better margins. We believe that last quarter of 2026 or the first semester of 2027, we’re going to be very close to our 15 margin points.

All right. Thank you. Just a follow-up here on the funding. You guys mentioned at the beginning that there are other mechanisms for improving liquidity, such as using real estate or monetizing on other assets. I mean, how relevant could those initiatives be in terms of monetizing real estate and other assets?

Francisco Ruiz-Tagle, CEO, CMPC: Yes, Emerson, this is Francisco. It could be really relevant. We mentioned we have an important forest base. We have, I would say, in what way we can monetize that. There are some of this probably forest base that is not really a strategic part of our forest base for CMPC. We are taking a look at that, and we already identified some areas. I would say that we can do some off-balance operations in order to get financing. We believe that we have an important base for doing that.

All right. Thank you. Thank you for the answer. Super clear.

Okay.

Claudia Cavada, Head of Investor Relations, CMPC: Thanks, Emerson. Thank you, Emerson. Please recall that you can still do your questions, raising your hand or typing in the chat box. We got a question through the chat box, a follow-up on the leverage calculation of the hybrids reflected 100% as debt on the balance sheet or 50% debt, 50% equity.

Francisco Ruiz-Tagle, CEO, CMPC: When I mean that, first of all, in terms of financial statements measured at IFRS, 100% of the total hybrid bond is reflected on the balance sheets. Since credit rating agencies provide the 50% equity component, when we calculated the ratio, and it’s clearly stated there, we are not adding 50% of that billion dollars in bond. In simple terms, we took out $500 million of the numerator and divided by the denominator. Again, I believe we—and if it’s not clear, we can have a bilateral discussion, but it’s clearly stated on the press release. Enrique.

Sebastián Moraga, CFO, CMPC: I don’t know if that’s clear because this was from the chat.

Claudia Cavada, Head of Investor Relations, CMPC: Yeah, it’s very clear.

Francisco Ruiz-Tagle, CEO, CMPC: Okay.

Claudia Cavada, Head of Investor Relations, CMPC: We do not have more questions for now. We can conclude the Q&A session. Before closing this call, we want to recall that next month, on December the 9th, we will host our Investor Day in Santiago de Chile. That will be in the morning and only an in-person event. We will welcome you if you can attend. For more details, please reach out to the Investor Relations email, or you will be receiving more information in your email. That is for now. Thank you for attending today. We close the earnings call. Have a good day.

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