Despite adversities, CMPC sees "new growth cycle"

In his first letter to shareholders as chairman of the board of Empresas CMPC, Bernardo Larraín Matte provided an extensive analysis of the adverse market conditions facing the forestry sector, but also sent a message of optimism, noting a "new growth cycle" supported by the company's expansion in Brazil.

Larraín began: "When I assumed the chairmanship of the board in April 2025, we were experiencing a deterioration in the various markets in which we operate. These trends deepened and, together with some internal factors, explain CMPC's low results in 2025." The firm's consolidated net profit decreased from US$491 million in 2024 to US$202 million last year.

Regarding the industry's short-term situation, he pointed out, for example, that "although pulp was not affected by tariffs from the United States, it is important to consider the indirect implications of the so-called trade war."

In this vein, he stated that "the major powers are placing greater importance on the self-sufficiency or proximity of their value chains." Pulp would not be immune to this trend, he added.

In that context, he commented that "China, one of the main markets for our pulp exports, has increased local production integrated with paper mills, taking advantage of the greater availability of wood generated by the decline in construction. On the other hand, that country's paper industry maintains high overcapacity that it has not managed to utilize by increasing exports to the required extent, affected by the trade war."

He indicated that these factors, "amplified by China's lower economic growth rate, have put downward pressure on pulp prices." Furthermore, he stated that "this situation has affected the markets for industrial derivative products that CMPC produces and sells. This is the case of the European cardboard market, where part of the aforementioned overcapacity of Chinese paper producers has been redirected, causing a substantial drop in prices."

"South America, and particularly Brazil, continues to consolidate"

Despite these difficulties, Larraín assured that "the solid fundamentals of the industry remain present and project continued growth in pulp demand." This is driven by the greater penetration of tissue products in emerging markets or the growing volume of e-commerce delivered in paper and cardboard packaging, among other factors.

On the supply side, he highlighted that "South America, and particularly Brazil, continues to consolidate as the most competitive global hub for pulp production."

One of the firm's strategic responses in this scenario, he added, has been to "consolidate a pulp production platform in Chile and Brazil." He indicated that "the future doubling of short-fiber pulp production capacity in the state of Rio Grande do Sul, Brazil, through the 'Natureza' project, is the fundamental basis of this pillar."

The businessman recalled that "the growth investment in pulp that began with the acquisition in 2009 of the Guaiba industrial complex in the State of Rio Grande do Sul, Brazil, has not only been profitable but also lays the groundwork for a new growth cycle through the Natureza project. Part of the fruits of that investment."

Regarding the financial resources for Natureza —amounting to US$4.5 billion— he detailed that "the refinancing operations through the placement of two hybrid bonds in 2025 help prepare the balance sheet for the project's development. Furthermore, progress is being made in reviewing assets with monetization potential and in the analyses and preparatory acts to enable bank financing, with entities such as ECASs and BNDES in Brazil, among others."

Regarding the permits for the new plan in Brazil, he estimated that the preliminary environmental license would be granted in May and the installation license during the first half of the year.

Source:El Mercurio