Empresas Copec SA
SGO:COPEC
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
5 740
7 811
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CLP.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
You don't have any saved screeners yet
Good morning, everyone, and welcome to the Empresas Copec's First Quarter 2019 Results Conference Call. Today's presentation and the first quarter 2019 earnings release are available on the company's website at www.empresascopec.cl, and also on our Investor Relations website investor.empresascopec.cl.
Before we begin, I would like to remind you that this conference is being recorded and that this presentation may include market outlooks and forward-looking statements, which are based on the beliefs and assumptions of Empresas Copec's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and, therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Empresas Copec and could cause results to differ materially from those expressed in such forward-looking statements.
This presentation contains certain performance measures that have been adjusted with respect to the IFRS definition, such as EBITDA. I will now turn the call over to Mr. Rodrigo Huidobro, Chief Financial Officer of Empresas Copec. Please go ahead, sir.
Yes. Hello. Hi, everyone. Thank you for joining us today in this call, where we will be taking a look at the results, the figures and the main developments related to the first quarter of our company.
Before we start, two things. One is that we are joined today by people from our IR department led by Mr. Cristián Palacios and also by people from Arauco led by Mr. Gianfranco Truffello. They will both -- all of them will help us out with any questions you might have in the final part of the presentation. Second announcement is that we have been informed that some people are having trouble getting access to the presentation that we have published online. We've already sent an e-mail to our investor database with the presentation attached. If you are still not being able to access the presentation, please send an e-mail right now to Mr. Cristián Palacios, cristian.palacios@empresascopec.cl. Look at that cristian.palacios@empresascopec.cl, informing him of the situation and we will send you the presentation back. Sorry about that and please proceed with that and we will send you the presentation shortly.
Okay. Having said that, we will start taking a look at the numbers. Let's go to Page 5 where we are showing the numbers in a historical context. You can see that our EBITDA came up to 5-9-1, $591 million which means up 7% on the last quarter but down 12% with respect to the first quarter last year. We will see that this is driven mainly by figures coming from our forestry sector.
Likewise, our net income went up with respect to the fourth quarter last year 50%, but it's down with respect to the first quarter last year by 21%. $221 million is the net income that we recorded this quarter.
On Page 6, we are providing an explanation on the main effects that we got from the adoption of IFRS 16. So this is the new accounting treatment for operational leases that started to be applied this year. What we have done is basically recognized ability -- which is the net present value of the future lease payments. And together with that, we've recognized an asset for roughly the same amount. So you can see there that we have assets -- additional assets, which amount to $640 million approx. and very similar amount of liabilities, which is pretty much in line with what we had announced last quarter in our financial statements.
These effects are related to all the equipment and assets that we are listing on that page so lands, equipment, tankers, warehouses, vehicles and so on and so forth, all of them with long-term rental agreements or lease agreements.
And what we have in the table there at the bottom of the page, we are seeing the main effects on the income statement. So you can see that reduced our leasing costs or leasing expenses by $39 million. That is exactly the same effect that we had in EBITDA. So $39 million of additional EBITDA because of these lease expenses that are not there anymore. Together with that, we are recording higher financial expenses for $5.9 million and higher depreciation and amortization as well for $33.9 million.
The final impact on net income is very small, a negative effect of $0.6 million. So that's been a major change in accounting rules that has begun to take effect this quarter, and that is why we are presenting this slide with these new effects that you should have in mind.
Having said that, let us move to Page 7, where we are taking a look at the main drivers in terms of companies for the upward and downward movements of EBITDA as well as the composition of our EBITDA. You can see there on the left-hand side that our drop in EBITDA, which amounts to 12.4% with respect to the first quarter 2018, is driven basically by Arauco, and is in turn related to the performance of the pulp division, basically lower pulp prices. This is partly offset by the positive effect in EBITDA $40 million approximately as we saw of the new accounting rule IFRS 16, and also by a very interesting performance of our fuels division in general.
To the right-hand side, you can see there that as usual, our EBITDA is made up basically for forestry and fuels divisions, with forestry now representing 61% of the total EBITDA in the quarter.
On Page 8, you can see a similar analysis for net income. Net income has amounted to 2-2-1, $221 million and the drop with respect to $280 million that we recorded in the first quarter of last year is explained basically once again by Arauco and related to a lower operational performance.
Together with that, we are recording a more negative result in Camino Nevado which is the parent company of our coal venture Mina Invierno which is facing lower coal prices and higher costs as well.
To the right-hand side once again, you can see the composition of our net income. In this case, 57% is represented by our forestry division.
On Page 9, we are taking a look at the net income statement. And we can see that net income dropped from $280 million to $221 million and is related again to lower revenue and a lower performance at Arauco because of our lower pulp price scenario. Together with that, we had the wood and forestry businesses remaining quite stable with respect to the first quarter last year.
In addition to that, and offsetting that, to a certain extent, we had a very good performance when measured in local currency for fuels division, which recorded a higher operating income both Copec and Abastible. When this is converted to dollars though, we have a lower operating income because of a high exchange rate, and also because of a higher depreciation and amortization, in part related to the effects of the new accounting rule.
In our nonoperating income, we recorded a less negative final figure, and that is related to higher other income in Copec and Abastible, which went ahead with a couple of sales of real estate assets, namely their former offices, their former office buildings in both cases were sold during this quarter. And also the positive effect in Arauco because of an increase in the fair value of biological assets -- the income related to fair value of biological assets. Together with that, we have lower financial expenses -- in spite of IFRS 16, we have lower financial expenses, and this was essentially because of onetime effect in financial expenses that was related to the ExxonMobil acquisition or the part of the acquisition that took place in the first quarter last year. At that point in time, we had some derivatives related to that acquisition and some bridge loans as well which brought up our financial expenses.
On Page 10, we can take a look at some financial ratios. You can see that EBITDA margin decreased a bit with respect to the first quarter last year, but increased with respect to last quarter and is now up to 10%. Our leverage ratio, which is the net debt to EBITDA, is up from 2x to 2.4x. Part of that, actually 0.2x is explained once again by the adoption of the new accounting rule IFRS 16, which as we saw, brings up our liabilities.
Excluding that effect, our ratio would have come up to 2.2x. So whatever the case, still a very comfortable level in terms of leverage.
Looking ahead in our other financial maturities, you can see that we have a quite a good and well-balanced schedule for the years to come, and this is even better following liability management that was carried out by Arauco in April and of which, we will say a word further on.
Now we are -- let's dig deeper into our forestry division and move to Page 13. Arauco had a lower operating income and this, once again, relates to the weaker pulp pricing scenario that we saw -- that we have seen during the first [ 2 ] months of 2019 compared to the first 3 months of 2018. Together with that, we had some increase in the unit production costs for both fibers.
We also had lower volumes and prices in sawn timber. All of that was joined by the fact that nonoperating income was flat. We had higher financial expenses because in the particular case of Arauco, we had this -- effects of the IFRS 16 accounting principle. But that is offset by an increase in the other income coming from fair value of biological assets.
So EBITDA for Arauco amounts to $362 million compared to $453 million in the comparable quarter last year.
On Page 14, we have a brief word on pulp. You can see that EBITDA drops with respect to both the fourth quarter 2018 and also the first quarter 2019, and this is basically explained by lower prices. Together with that, unit production costs have gone up with respect to the first quarter last year by 7.1% and 3.7% in the case of both fibers, and have gone down with respect to the fourth quarter last year by 8% approximately and 4% for softwood and hardwood, respectively.
Prices -- as you can see in the table on the lower right-hand corner, prices have gone down by 12% approximately year-on-year, and by 11% quarter-on-quarter. Some more facts about the pulp scenario on Page 15. As you can see, we are seeing a scenario where the main development has been the ongoing trade wars between the U.S. and China, which is basically affecting, as you well know, affecting international commerce and economic activity in general.
We have though a trend towards recovery in the first quarter and especially towards the end of this first quarter. However, we have been doing all this time, facing a scenario with very high inventories, which has lended more volatility to prices. High inventories and trade -- ongoing trade wars are basically the 2 main drivers that have determined the behavior of pulp prices.
Demand, stable at a world level, but going down in China as you can see in the table, with a decrease of 5.4% in Chinese demand.
On Page 16, some more data on pulp. Expecting an uncertain scenario basically because of a low demand season that is starting right now. Together with that, ongoing developments in trade wars and high levels of inventories. This has given way to a lot of market uncertainty, high volatility within the respective markets, and high variations between one transaction and another. We are seeing some production curtailment and some actions by some players in the market trying to lend some more robustness to the supply sector in this scenario.
You can also see the Arauco's net realized prices in China in the graph that we are showing there on the left bottom side of the page.
Moving on, on Page 17 to wood products. You can see EBITDA going down with respect to the first quarter last year, and that relates basically to both prices and volumes, and in the case of panels, and some timber going down to a certain extent with respect to that year.
On Page 18, some words on what we are seeing in the different panels and wood markets. In U.S. and Canada, which is our main market with 54% of our sales, we are seeing a stable housing starts index, which is the main driver of our sales in those markets. It has been stable for a while at 1.2 million units per year. In terms of trends for particleboards and MDF, we're expecting the demand to remain positive. This is basically due to seasonal effects. And together with that, we are seeing slightly lower production, which is also good in terms of pricing support.
In terms of remanufactured products, there might be some good effects coming from weather conditions and also related to new duties imposed -- new tariffs imposed by the U.S. on production coming from China.
In plywood, healthy demand in general, but definitely an oversupply of production coming from other markets, which might hit the markets in the U.S. and affect prices and generate downward pressure on prices.
In South and Central America, which is our second most important market with 31% of our sales, our main market there is Brazil, and we are seeing general challenging scenario. Economy has not recovered in a strong way. Consumption is not strong either and there might be some increasing production capacity of other Brazilian players in the panel market. So a challenging general -- a challenging scenario for Brazil.
Argentina has been okay in terms of demand and volumes. But of course we have inflation problems and currency depreciation problems there that affect finally our margins when measured in dollars.
In Chile, we are seeing stability in general, a positive outlook. But some slightly lower growth in construction, which basically affects our plywood division.
Asia, definitely hit by the trade wars, a lot of uncertainty there. Europe is hit as well by competition in general by Brazilian producers. And Middle East is basically centering once again European and Brazilian producers, selling their production into European markets, which might trigger some downward pressure on prices.
Let us move onto our fuels division. We are showing some numbers on Page 21. Copec, this is -- these are the consolidated figures for Copec so therefore, including our Chilean fuels division plus Terpel plus Mapco in the U.S. You can see here that the main driver of net income here has been lower nonoperating loss, which is driven in turn by other income related to the sale of real estate assets that we already mentioned.
Together with that, lower financial expenses in spite of IFRS 16 coming from the fact that we had some one-off effects last year related to the acquisition of Terpel, ExxonMobil by Terpel.
In terms of operating income, we have very good results in Terpel, as we will see, influenced in part by the acquisition of the ExxonMobil assets, but also with a very good commercial performance in the usual markets and activities of Terpel. Very good performance like Mapco as well with increased unit margins in the U.S. So very good EBITDA and operating income contribution by Mapco. And in Chile, we had a good commercial performance with volumes going up. Margins going down a bit, especially in the industrial sector and also affected by a lower FIFO effect, which is the inventory effect that hits our margins whenever we have periods of oil prices going down in certain periods of time. All in all, we are showing the EBITDA of the consolidated fuels division there in Chilean pesos, and we can see that the increase with respect to that year is quite significant, approximately 20% increase in EBITDA with respect to last year and so interesting performance.
On Page 22, we're showing some more figures for our division in Chile. On market share is back up to more than 58%. This had been going slightly down for a while, but as we had anticipated, we are -- we had incorporated new contracts, especially supply of fuels to mining clients, which have been very high volumes and that has pushed our market share back to above 58%.
That is in line with the industrial channel growth that we are showing, which is 5.1% so the industrials are going up by 5.1%. Once again, to a great extent, related to these new contracts that have begun over the last [ few ] months. Gas stations are up by 2.3% so also quite healthy growth in gas stations with also interesting margins in that channel.
The aggregate growth of volumes in Chile is 3.6% so a nice volume growth figure in Chile. Going forward, as always, we're expecting stability in margin only affected by the potential FIFO effects that have -- that move in line with the ups and downs in oil prices and that affect our margins. Together with that, we might have some volatility coming from the opportunities for importing fuels that we see going forward.
We have a good position on gas stations, strong network positioning and brand positioning. And once again, as we see there, Mapco is showing interesting developments in the U.S. Unitary margins have been good. We are looking at ways in which we can possibly stabilize a little bit more unitary margins. We're also looking at alternatives for improving operational efficiency, and also working in our product mix in convenience stores. But all in all, a very good quarter for Mapco.
On Page 23, a brief look at Terpel. Terpel has increased by 11.6% in volumes in total. This is made up of the increases that we are showing in the bottom left corner down there, country-by-country. So you can see here that volumes especially increased in Ecuador that is related of course to the acquisition of the ExxonMobil assets in Ecuador, which basically allowed us to double our volumes there.
We're also growing significantly in Peru, Panama and healthily as well in Colombia. In general, in Terpel, we had higher unit margins in liquid fuels. We had, as we said before, a lower financial expense because of the onetime effects last year related to the ExxonMobil assets when we acquired them. And margins are offset to a certain extent by a negative effect in FIFO. We're also showing there the EBITDA contribution from ExxonMobil assets, this has -- the trend there is quite positive, as you can see. And we expect it to gradually continue growing as we incorporate the assets, and as we continue making progress in operating them as efficiently as possible. Contribution last quarter was approximately $11 million, $11 million of EBITDA coming from the new ExxonMobil assets.
In the case of Abastible, which is shown on Page 24, we are basically seeing effects which are nonoperational and that relate to, as we said, the sale of the former office building of Abastible. Together with that, some higher income coming from associates basically related to the logistic associates in which Abastible has a stake. In terms of operating income and EBITDA, it is quite stable. We are seeing a very interesting performance in Colombia, higher margins, lower administration expenses and also lower distribution costs.
So with efficiency initiatives that have worked quite well in Colombia, offset in part by a decrease in Peru, which basically has to do with a onetime effect related to organizational efficiencies that we are going ahead with in Peru. So a onetime effect that brings the EBITDA down in Peru with respect to the first quarter last year. In the case of Chile and Ecuador, stable EBITDA in both cases.
We are showing some operational figures on Page 25 for Abastible. You can see volumes slightly down in Chile and Colombia, going up significantly in Peru, but that is basically the wholesale business, which is a low margin business. But anyhow, interesting growth.
Ecuador, quite stable but also growing at a rate of almost 2%.
In Chile, we expect both the bottled market and also the bulk segment to grow. In the first case, because of housing developments. In the second case, because of substitution of other forms of energy and also because of a new -- newly -- new commercial strategies, which are being implemented by Abastible. In Colombia, we are facing pretty high competition in the case of bottled market. This comes from natural gas, some smuggling as well, and also smuggling from Venezuela and the political situation in which Venezuela is living right now, and also some alternative sources of energy. In the case of bulk segment once again, we are working on new commercial strategies, which have brought about, and will continue to bring about, interesting growth.
In Peru, we have made significant progress in commercial terms. We have managed to increase our total volumes and also the volumes in the bottled channel, which is the higher-margin channel. This has been done through optimizing the use of 2 brands and also through increased distribution coverage. Informality continues to be a challenge there, but also a long-term opportunity.
In the case of Ecuador, volumes continue to grow and Duragas, which is our subsidiary there, continues to gain market share. All in all, nice quarter for our LPG division.
On Page 26, and very briefly, this is our pipeline subsidiary. This is Sonacol. You can see that EBITDA and net income are up, both of them in line with an increase in volumes transported through pipelines. As always, a very stable division where operational and nonoperational income basically is indexed through the amount of volumes transported.
Moving on to Page 28, a brief word of -- on our other investments. In the case of our fishing division, Igemar, we had a higher loss, slightly higher loss than last year, basically because of a lower result in our northern fishing division associates, Corpesca. Corpesca is -- was affected by fishing restrictions which were in place during the first 2 months of this year and, therefore, catches that were lower than last year.
In the case of Alxar, this is the company through which we hold the investment in Mina Justa in Peru. Losses of course related to the development stages of the projects. In the case of Laguna Blanca, which is the parent company of our Mina Invierno coal project, it has been affected by prices, international prices, of coal going down and also higher costs of operation.
Finally, regarding our natural gas divisions or natural gas associates, Metrogas and AGESA. Metrogas saw an increase basically related to the fact that it had onetime provisions last year. And AGESA also recorded a net income increase because of increased sales to some industrial clients and also some reversals of existing provisions.
Those are the numbers for the quarter. We've also put together a set of developments that we would like to comment on. So if you go onto Page 30, we announced our final figure for the investment plan 2019. It will amount to approximately $2.7 billion, $2.7 billion. 74% of that will go to the forestry sector. And that figure is made up of our usual maintenance Capex, which amounts to around $800 million to $900 million. Of that you had to add disbursement that will be related to all the projects listed there. MAPA or anywhere between $900 million or $1 billion this year. Masisa Mexico, which is around $170 million.
Dissolving pulp, $100 million to $120 million. Very small investment remaining incurred during the first 3 months of the Grayling Mill. And also approximately $150 million during the year for the development of Mina Justa. All in all, $2.7 billion for estimated Capex for this year.
On Page 31, a couple of pieces of news from the MAPA projects. We have started earthworks in February 2019 this year. Earthworks have already started. The assembly of equipment is expected to start in October this year. As we have said before, this new line is expected to start production in the second quarter of 2021. We have signed a financing agreement with the ECA from Finland, Finnvera, amounting to EUR 555 million, which will be basically used in acquiring the main equipment for the projects.
Just to remind you, the estimated Capex for the project is around $2.3 billion. Going forward, we expect to go ahead with the bidding process for construction companies. We are expecting to begin equipment assembly in October this year. And as we said before, in the second quarter of 2021, we should be starting operations in this line.
On Page 32, some news about Grayling. We have already inaugurated this mill. It started collection and is going through its ramping up period. We are expecting a total production of around 400,000 cubic meters for this year and ramping up to continue and possibly reach full capacity by next year.
So as I said, already started operations there and mill was inaugurated in April this year. Regarding Valdivia, the project has moved ahead as expected. 75% completion already and expecting to start ramping up during the last part of this year. The total CapEx has -- will amount up to $190 million. And just to remind you, this is a mill that will allow us to enter a new market, which is dissolving pulp, while at the same time, maintaining flexibility to switch back to paper-grade pulp, if needed.
On Page 33, this is a bond issuance that Arauco went ahead with over the last couple of weeks. It was a financing for $1 billion in all, $500 million which are due 2029 with a rate of 4.25%. Another $500 million due in 2049 with 30 years' maturity with a rate of 5.5%.
The uses of these proceeds will be financing the MAPA projects. It will be used to fund, in part at least, to make some liability management and to pay for some maturities that we have up and coming during this year and for other corporate purposes and to maintain flexibility as well.
In the case of Mina Justa, which is shown on Page 34, we have made progress as expected. The project is already at 30% progress at the end of March. We have 4,400 people taking part in this project at this stage. Just to remind you, the total CapEx expected here is around $1.6 billion. That will be financed with $900 million of debt, which is a project financing that we have gone ahead with some ECAs and banks as well. That's already in place, $900 million of debt. And that will be complemented with $700 million of equity approximately, of which, we hold 40%. So in the case of Empresas Copec, the total equity contribution will amount to $280 million approximately, of which, approximately $150 million fall within this year 2019.
This is the project that is located in the south of Peru. The controlling shareholder there is the Minsur Group, Minsur company, a Peruvian company in mining. And this project will be producing an average of 115,000 tons per year in its years of operation, reaching, in some years, as far as 150,000 tons.
And finally, on Page 35, we also went ahead during this quarter, in April actually, with the sale of a stake we had in a company called -- a port company called Puertos y Logística. This was bought -- the controlling stake and also there was a tender offer in the market driven by a company called Dubai Port DP World Holding UK. The total amount for which we sold our stake, it was a 23% stake in the company. We sold it for total proceeds of $117 million. Net income after tax related to that will be recorded in the second quarter and should amount up to approximately $20 million, so that will be a one-off effect that we will -- that we are anticipating and that will be seen in the second quarter of this year.
With that, we are finishing the material that we had prepared for you. And I will now be happy to open the floor for whatever questions you might have. Thank you.
[Operator Instructions] Our first question comes from Carlos De Alba with Morgan Stanley.
The first question, if I may ask, is regarding the pulp cost, they increase year-on-year. And so I just wanted to understand what is the trend that you see going forward? Clearly, as you mentioned, Rodrigo, the challenging scenario prices means that if pulp costs continue to increase, margins will squeeze. So if you can explain, what is the outlook for costs is relevant? Second is, you mentioned that there is a -- seems to be this year an early start of the low season -- or low-demand season globally, maybe mostly in China and perhaps Europe. Could you explain why this is the case? And also on -- in that context, what is the status of the current negotiations with price -- with the buyers, paper -- pulp buyers in terms of -- or paper producers in terms of prices? And then finally, where do you see leverage going in the coming quarters as the investments in MAPA and, I guess, Mina Justa start to ramp up to higher levels?
Yes. Thank you, Carlos. Let me start with consolidated leverage. According to our projections and depending of course on the scenario we finally face for pulp prices, but we should be well below what is required from our rating agencies in terms of being able to maintain our current rating. So we do not think that we will go above 3x for a significant time. Let me remind you that the way they see it is basically with a mobile trailing average for leverage. And using that form of cultivating, we shouldn't be above 3x for a significant amount of time and, therefore, our rating is not at all in question. So that's in terms of leverage. But of course, depends on the pulp prices. I will hand it over to Gianfranco Truffello in order to take questions related to pulp prices and costs.
Okay. Thanks, Carlos. Regarding the increase in cost of production for pulp comparing the first quarter of a year ago to this quarter, basically we have a change in the transfer pricing of wood from the forestry division to the pulp division that was done in the fourth quarter of 2019 -- '18, sorry. So that's why it's just a transfer of value from one division to the other. And so that's not the structure of increasing cost.
The other thing that we had is an increase in maintenance costs this quarter because a big mill [of us, which is Noel Vega] during the annual stoppage. And that of course, increases a little bit the maintenance cost. And also we have a little bit of increase of energy and fuel this quarter compared to a year ago. If you compare the -- this quarter to last quarter, you see a reduction because we also had a couple of big onetime effects in the fourth quarter regarding some deterioration of -- on provision for some assets in one of our mills in Arauco, which impacted basically more softwood than hardwood, but had a onetime effect that was significant that caused the cost increase artificially. I will say that cost of production should be more or less stable, I would say, -- like this last quarter, first quarter of '19. And we shouldn't see any big increases because the transfer price will stay the same as already modified. So we shouldn't see any big increases in the cost of wood, and we think that maintenance costs should be a little bit lower depending on the maintenance of the different mills that will happen during the quarter.
And regarding pricing. Yes, the situation changed a lot. I mean from the trend that we had until April, prices were recovering in March and April. We were looking at a slighter -- brighter future. And then the situation changed in the trade war, with fighting between Mr. Trump and Mr. Xi Jinping started to, again -- more fiercely, I would say, and that produced more volatility in the market and that's why we are suffering right now in the month of May. We were expecting to announce some changed prices for May, but the situation changed and we most probably have reductions in prices for both fibers in May. We don't know yet because we are still negotiating with our customers in China. So we don't have any light on what that reduction will be, but most probably, we will have a reduction in price to accommodate the lower demand. This is basically because there's more uncertainty about the future for them as production of paper, containerboard and other products and they see also bigger inventories at the port. So they could afford to have less inventory and buy less, and that reduction in volume is costing some price negotiation of the different producers that would like to sell their product. And that is what we are saying about the early start of the low season that is normally in during the summer in Northern Hemisphere, which is June, July and August. So we will still need to wait a little bit more in the final week of the month to see what -- where the prices will land, and we'll have more perspective about the rest of the year. But basically, it's another round of volatility that is impacting not only pulp prices, but also other commodities and stock indices around the world.
Our next question comes from Arthur Suelotto with Bradesco.
I have 2 questions. The first one is actually a follow-up on the pulp market comment that Gianfranco just gave us. Gianfranco, do you think -- you mentioned that the situation has changed, and the demand has weakened for both fibers, but we have been hearing that maybe the deceleration now, the most recent one, is mostly focused on softwood and particularly softwood in Europe and that might be causing some diversion of volume that should be going to Europe, they are now going to Asia. Some of this volume is actually -- that are produced by European pulp makers and they are instead of sending to Europe, they are in Asia and that is one of the reasons there's flattening of the spread between the fibers.
So do you believe this trend makes sense? And in this sense, do you believe that you can see this spread going down more than the level that we're seeing right now? At what point do you believe this should also trigger a reduction in hardwood prices as well? That's the first one and the second one is on fuels. You mentioned in the release that you -- the assets acquired by ExxonMobil with you and lubricant distribution assets acquired from ExxonMobil which integrated was roughly $10 million, if I'm not mistaken, in EBITDA for the sales during the first quarter. So my question is how much can we expect in terms of contribution to EBITDA coming from these assets?
I'll hand it over to Gianfranco for the pulp question and then I'll take it for the fuels question.
Yes. I think you're correct. I mean having a weaker European market is putting more pressure on volumes going from Europe to Asia to try to sell more spot volumes of softwood and that of course, will create more pressure on softwood. And we don't have the situation in softwood like we have in hardwood having a big producer that could control the inventories and the supply. So it's more difficult in softwood than hardwood. But on the other side, the spread between both fiber is still -- it's very low right now, it's just about $10. So that put some color -- of flooring in how low could prices of softwood go down. I don't have a clear view of what will be the movement, but I will guess that both fibers will go down and maintaining a low spread because of the situation of somehow volume from Europe going to Asia as some spot volume needs to find a way into the market.
Yes. And regarding your question on ExxonMobil, what we have recorded for this quarter is approximately $11 million, which is way above what we saw during the last few quarters when we began the operations. We have been facing conditions which were not quite as expected vis-à-vis in terms of, first of all, exchange rates, also in terms of the price of raw materials, which is expect -- which is closely linked to the price of oil. Also regarding the reaction from our main competitors, we have seen a quite extreme reaction in some markets. Putting all of that together, we continue to believe that in the long term, we should achieve the $60 million to $70 million figure that we had previously estimated, of course, if currencies and oil prices go back to former levels. Within this year though, we should not be aiming for that figure. We should rather than that be aiming for figures of approximately $50 million for this year in particular. But all in all, in the medium to long term, we continue to believe it's a very good acquisition yielding a lot of value.
At this time, there are no further questions in the question queue. This will conclude our question-and-answer section. At this time, I would like to turn the floor back to Mr. Rodrigo Huidobro for any closing remarks.
Okay. Thank you very much for joining us today. And we expect to come back to you sometime during August for the first half results. Thank you very much.
Thank you. This concludes today's presentation. You may now disconnect your lines, and have a nice day.