Empresas Copec SA
SGO:COPEC
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Good afternoon, everyone, and welcome to Empresas Copec's Fourth Quarter 2021 Results Conference Call. Today's presentation and the fourth quarter 2021 earnings release are available on the company's website at www.empresascopec.cl and also on our Investor Relations website at investor.empresascopec.cl. Before we begin, I would like to remind you 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 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 IFRS definitions, such as EBITDA. I will now turn the call over to Mr. Rodrigo Huidobro, Chief Financial Officer of Empresas Copec. Please go ahead, sir.
Okay. Hello, everyone. Thank you very much. Thank you for joining our conference call. We will be taking a look at the results related to the fourth quarter of 2021. As usual, we are joined today by people from our Investor Relations department, led by Mr. Cristián Palacios and also people from Arauco, our forestry subsidiary, led by Mr. Gianfranco Truffello. They will all be helping us out in answering any potential questions you might have at the end of the presentation.
Having said that, let us move on to Page 4, where we are reviewing the main highlights for the quarter. We had EBITDA that increased quite importantly year-on-year, and that is explained by a better performance of our main divisions, which are forestry and energy. In the case of forestry, we had increased pulp and wood performances. In the case of pulp, we've seen prices, which improved with respect to the fourth quarter in 2020, although volumes decreased slightly. In the case of wood products and panels, we've been seeing quite consistent good performance of that division over the last few quarters. And once again, we saw higher margins in panels and sawn timber for this quarter.
For our energy division, the main driver of the better results come from volumes recovering gradually, continue to recovery from the pandemic levels and already reaching pre-pandemic levels and above pre-pandemic levels. Also we saw strong recovery in all geographies with a higher EBITDA at Copec, Terpel and also Mapco in the U.S. That was partly offset by a lower EBITDA coming from our LPG division related to higher prices of propane, which have not been able to -- the companies are not able to pass through completely to the final customers.
In what relates to our main projects, we have updated the progress for MAPA, which is 93% as of January 2022. And we are now expecting a start-up of the project at the end of April this year. We have also updated the total CapEx related to that project, and we will be showing more details during the presentation.
In relation to our Mina Justa project, it has continued to ramp up, of course, as you all know, in a very positive price scenario. In relation to our balance sheet, we have continued to improve our credit metrics and now showing net debt to EBITDA, which has decreased from 4.2 at the end of 2020 to 2.1 at the end of 2021. And finally, in relation to ESG, we have been confirmed in some top sustainability indexes and rankings. And through our subsidiary, Copec, we continue to make progress in electromobility and all initiatives related to energy transition. Moving on to Page 5. We can see the EBITDA for the quarter. That amounted to $902 million, which is up 57% with respect to the fourth quarter 2020 and down 7.5% with respect to the immediately preceding quarter. In relation to net income, it's $478 million figure and that means almost 4x year-on-year and lower -- 35% lower with respect to the preceding quarter, in which we recorded a onetime effect related to the asset sales. All in all, very good levels for EBITDA and net income.
Moving on to Page 6. You can see the main variations in EBITDA, so increasing 57% with respect to the previous year, and that is explained basically by Arauco, where we saw a better performance in pulp and wood products. Also, explained by Copec, where we saw higher volumes and also an inventory revaluation effect. To the right-hand side of the graph, as usual, you can see that the main components of our EBITDA are Arauco and our energy subsidiaries, Copec, Abastible and Sonacol.
On Page 7, we have a similar analysis for net income. Net income amounted to $472 million, which is 304% above what we recorded for the 4Q 2020. And that is explained by Arauco with an increase of $142 million. We also have a very significant contribution from Mina Justa to our subsidiary, Alxar Internacional. And also, we have some effects coming from Empresas Copec in the parent company and other segments, essentially related to a better result coming from our investments in Laguna Blanca, which recorded an impairment in 2020, which is not recorded this year. And also, we have some effects related to the sale of Laguna Blanca Mina Invierno, which we'll be commenting further on.
To the right-hand side of the graph, you can see the main components, once again, Arauco, the fuels subsidiaries and importantly and very interestingly, Alxar is gaining a very significant place in terms of contributing to our net income in this quarter from the Mina Justa project, of course. On Page 8, we are digging deeper into the numbers. Once again, net income is $478 million for the quarter, which means an increase of $359 million on the figure recorded in the fourth quarter 2020. This stems from an improved operating income coming from Arauco and Copec. In the case of Arauco, improved pulp and panels and sawn timber performances. In the case of Copec, basically higher volumes and inventory revaluation effects in Chile and Colombia. We have some reclassification effects in the case of nonoperating income, which distort the figures a little bit. So in other income, we have a decreased other income because we have reclassified some profits from forestry asset sales, which were executed in the previous quarter and that amounts to $250 million. Together with that, we have a lower revaluation of biological assets.
In the case of other profits, we have the symmetrical effect from the reclassification. And together with that, we have a loss -- a pretax loss of $50 million because of the sale of Laguna Blanca, which is the parent company of our Mina Invierno project, the coal project in the south of Chile. Some more details on that also to come. And finally, we have greater profits in associates and joint ventures related to the very good performance of Mina Justa during the quarter and also compared with a lower base in the fourth quarter 2020 because of the impairments recorded in Mina Invierno, in Laguna Blanca.
Together with all that, we have lower taxes, which stem from, of course, a higher tax base because of a good operational performance, but offset by some impact from deferred tax assets. Moving on to Page 9. Some words on our ratios -- our financial ratios. You can see that return on capital employed and EBITDA margin has been improving as the operational performance of our divisions has been moving up. In terms of our credit metrics, as we said before, we are reaching a net debt-to-EBITDA of 2.1, having decreased from a high of 4.6 at some point during 2020. So a very significant improvement in our credit metrics. Also, in relation to interest coverage, we are at a very healthy level of 11.3x. Together with that, debt maturities, which are quite well balanced during the next few years.
Just a couple of more things to highlight. The gross debt dropped $764 million during the year, which is a good terms -- a very good thing in terms of credit quality. And we were also able to pay out dividends for $797 million, which is an interesting figure during the year. Also, during the fourth quarter, we closed a revolving credit facility line, a committed revolving credit facility line with club deal of international banks. And this is aimed at strengthening the company's liquidity and also providing, of course, financial flexibility for any projects that we decide to go ahead with in the future.
Moving on to the review by business division. Let us start with forestry on Page 12. Arauco recorded a net income for the quarter of $217 million and an EBITDA of $643 million. And this is due basically driven by increased and improved performances in pulp and wood products. In the case of pulp, basically better prices than in 2020. In the case of wood products, improved margins because of prices in sawn timber and panels, essentially. Nonoperating income is less -- is more negative than in the fourth quarter 2020. That has to do with a lower revaluation of biological assets. Also with unfavorable other expenses, which have to do with impairments and losses due to forest fires. And all of that has been partly offset by financial expenses and exchange rate differences. Together with that, of course, higher taxes because of an improved performance and therefore, an increased taxable income.
Going on to the pulp division on Page 13. You can see that the EBITDA for pulp recorded during the quarter was $352 million, which is down from the third quarter. The third quarter there is presented including and excluding the onetime effect related to the asset sales, $385 million, the recurring EBITDA from the third quarter compared to $352 million this quarter and of course, much better than last year, fourth quarter 2020, where we recorded an EBITDA of $122 million. That has to do with essentially with prices increasing significantly, 38% increase in prices on year-on-year, offset by a certain extent by volumes, which were down by 6%. And comparing with the immediately preceding quarter, we have a decrease in prices of 12%, offset by volumes that went up by 13%. So all in all, a very good performance of the pulp division also during this quarter.
On Page 14, some further comments about pulp during the quarter. In general, we saw stability. We saw some increases in certain markets. In China, we had seen pulp demand going down before, but it stabilized during the quarter. However, we didn't see the seasonal increase that we usually see at the end of the year. Inventories are standing at quite normal levels and have been affected by supply and chain issues. In Europe, we have seen, in general, during the whole year, a very stable situation with prices at very high levels. And with final markets for paper in general, during the quarter being able to pass through increased costs to final customers. On Page 15, some other elements related to the outlook for pulp. The market in general has been determined by logistical difficulties all across the supply chain, as you all know. This has led to prices increasing in all paper grades -- in all pulp grades basically. Asian markets, in general, trending up and with good operating rates for all grades. Inventory issues and delivery delays because of the supply chain problems that we have commented.
In the case of Europe, still very strong, pressured by logistical difficulties and also in that particular case by a strike that has been going on in one Scandinavian producers for quite a long time. And now, subject to whatever effects, probably too soon to say, but whatever effects come from the conflict in Ukraine as well. All in all, we are seeing prices as of March of $700 per ton for hardwood, $890 for softwood and $960 for dissolving pulp. So in all cases -- in all 3 cases, prices have rebounded from the levels at which they started the year. So good news in that regard.
The gap, as you see there in China is standing at $211 per ton between the 2 most important fibers, which is, of course, above average -- above historical average for the gap. In the case of wood products, which are shown on Page 16, we continue to show very interesting levels of EBITDA, $320 million for this quarter compared to $338 million in the immediately preceding quarter and compared to $197 million, which was already very good in the fourth quarter 2020. So this is a division that has been performing quite well for several quarters in line now. This has been essentially driven by some effects that were, to a large extent, triggered by the pandemic, remodeling of houses and also building of residential neighborhoods, nontraditional residential neighborhoods outside the usual areas and further away from the cities that has boosted demand for these kinds of -- for all construction products and for this kind of panel and wood products in particular. As you can see there, prices have gone up by 31% with respect to 2020 in the case of panels, 44% in the case of solid wood, so quite significant price increases, offset to a very low extent by slight drops in volume. But in general, a very good trajectory for prices and volumes and very good EBITDA performance for this quarter.
In terms of the outlook for this division in North America, where we sell almost 50% of our total sales, we continue to see the same trends that have marked this business for a while. We continue to see them very patent and very present. In the case of particle board, we saw during the first few months of early '22, high demand for panels and furniture products. So over the next few months, we should see demand remaining strong. In the case of remanufactured products, prices could continue being strong during the next few months. Once again, this is related to housing, repair and remodeling segments.
Together with that, in this particular segment, we could see some effects from Russian competitors eventually being -- or some competitors in general being affected by Russian timber by the lack -- potential lack of Russian timber. In plywood, likewise, demand has been very strong, and for the time being, we expect it to continue being strong. Once again, we could see some effects here of eventually Russian producers being disrupted by the conflict in Ukraine.
In the case of South and Central America, which is our second most important market with almost 40% of our total sales, brazil continues to be strong, but we are seeing some initial signs of market beginning to eventually weaken a little bit. So first, signals of potentially this market not performing as strongly as it has done during the first -- during the last few quarters.
In the case of Chile, all very stable, all very good. We have been, in general, announcing increases in prices. Some uncertainties in the housing and real estate markets. And also some uncertainties related to logistical issues. Some competitors have been unable to export their production, and therefore, there is some more supply in the local market. So that could bring about some downward pressure on prices over the next 2 months. In Argentina, in general, strong demand and prices have been able to offset depreciation and inflation. Asia and Oceania, everything quite stable. And once again, prices have been pressured by logistical difficulties as elsewhere in the world.
Moving on to our energy segment. Let's begin with Copec on Page 20. We recorded for the quarter a net income of CLP 69 billion compared with CLP 40 billion in the last quarter 2020. Operating income was up quite significantly because of higher margins in Copec and Terpel, which are essentially explained by higher volumes, which recovered quite strongly. And also explained by an effect of inventory revaluation because of oil prices trending up and also some increases in industrial margins. The increases in volumes are quite significant. You can see them there, 22% for Terpel, 16% from Chile and a slight 0.6% for Mapco in the U.S. In all cases, we have reached levels that are already above pre-pandemic levels, quite interestingly.
In the case of nonoperating result, we have some increased other expenses related to some impairments because of closed facilities. Some losses in net monetary position, some higher financial expenses, offset by exchange differences. And finally, of course, a higher tax related to this improved performance and a higher taxable base.
Operationally speaking, on Page 21, we have reached a market share for the year, which is up to 58.4%, which is pretty much in line with what we have been showing over the last few years. So it's a stable market share of around 58% for Copec. In terms of fuels volumes, we have seen increases of 15% and 17% in industrial channel and gas stations, respectively, which are quite impressive rates of growth for the quarter compared to 1 year before that, compared with the fourth quarter 2020. So year-on-year, very interesting growth rates for volumes.
In terms of the outlook, we have continued to see a very strong operational performance of gas stations with volumes growing above pre-pandemic levels, as we said. Margins -- commercial margins should be stable. But as we well know, this is a business that -- where there is some volatility related to FIFO effects, inventory effects, of course, and also to some variations in industrial margins. And finally, some volatility related to the conversion of the local currency figures into dollar figures for consolidation.
So performance when measured in dollars, is also subject to the exchange rate that we face in the different geographies. In general, we are seeing that our gas stations are performing very well. We have a leadership position, a very strong customer preference and very well positioned to continue leading the market. Moving on to Terpel, on Page 22. We saw a higher EBITDA with respect to the fourth quarter 2020, COP 282 billion compared with COP 254 billion in the fourth quarter 2020. So a very interesting increase related to revaluation of inventories, which is called [Foreign Language] in Colombia. And an important increase in volumes.
You can see there that the total volumes increased 22.1%. You can see that in the bottom left-hand corner, which is composed essentially of an increase in Colombia, a very interesting increase of 23%. And also, interesting rates of increase the Dominican Republic and Peru, which are basically aviation markets. Aviation has been recovering strongly from the pandemic levels, not quite reaching pre-pandemic levels yet, but recovering very strongly, as you can see there, with this more than 60% rates of increasing volumes.
On Page 23, we are showing some operational figures related to Mapco. We saw an increase of volumes of 0.6%. We recorded an EBITDA, which amounted to $7.8 million, which is higher than the one we had in the fourth quarter 2020, $5.8 million. We ended the year with an EBITDA close to $60 million in Mapco, which is a very good performance, not as good as what we had last year, which was more than $70 million. Last year was exceptionally good in terms of margins. Our margins tend to be very volatile in these geographies. And as you might remember, 2020 was a very good year for Mapco in terms of unitary margins. Still, a very good performance in Mapco during the year.
We are focused in several challenges that we have in Mapco. Margin stabilization. As I said, the margin tends to be very volatile here, and we would like to try to stabilize it more. Operational efficiency and cost reduction. That's also a major challenge we have, especially in these times where labor costs are pressuring costs upward in the U.S. in general, seeing a strong pressure from labor costs.
We're also working in improving the product mix at convenience stores. We have done very well there. And also, optimizing the network of gas stations and renewing and rebranding some specific gas stations or some specific sales points. That's it for Mapco. Moving on to Page 24, some comments about Abastible. Abastible ended the quarter -- the fourth quarter with an EBITDA of CLP 25 billion, which is slightly lower than the comparable EBITDA in the fourth quarter 2020.
Net income was significantly lower than the fourth quarter 2020, CLP 5 billion. And this stems from a lower operating income, which in turn comes basically from increased international propane prices, which -- where the competitors have not been able to fully pass through the increases to the final customers. That has been offset to a certain extent by increases in volumes in Chile and Ecuador, but volumes are -- have been flat in Peru and decreasing a little bit in Colombia. On the nonoperational side, we have one important onetime effect, which is financial income -- positive financial income explained from some adjustments related to cylinder liabilities, basically coming from the reestimation of the discount rate.
And also, we have a very important effect in taxes. Taxes are way higher than last year because of increased taxable income but together with that the volatility coming from the recognition of the investment in international subsidiaries, which is volatile depending on the exchange rate and which, in the case of Abastible, is proportionately very important. So we usually get very strong effects in taxes one way or another, either positive or negative, in the case of Abastible coming from these international investments.
Some additional operational information on Page 25. We can see here that volumes in Chile grew by 6.6%, and we have seen that in the bottled segment. Volumes have been increasing all year round, and that has to do with the recovery in economic activity in general. Also, to competitive pricing and also to enhance liquidity having been present in Chile during most of the year coming basically from fiscal stimulus. In the case of the bulk segment, Abastible has been doing commercially very well. We continue to gain market share and therefore, continue to increase volumes and also margins. Market share has been increasing in both segments. In Colombia, we had some increases in volumes in bulk segment, but margins have decreased basically because of higher costs. We are beginning to see this effect in all geographies where the increased prices of propane make it very difficult to pass through the increases to the final customers, and therefore, we see decreased margins in all 4 countries.
Another effect that we are seeing because of the high propane prices is the fact that clients are beginning to look at substitutes. And we saw that in Colombia, for example, in the bottled segment during the quarter. So increased consumption of substitutes because of the high prices of propane. In Peru, volumes were flat with respect to last year. Once again, the substitution effect coming from the high prices of propane and once again the margins which are a little bit lower because of the increased prices of propane. In Ecuador, a good performance of both channels.
We have a slide with other investments on Page 27. We would like to highlight Alxar Internacional, which is the subsidiary through which we hold the Mina Justa investment. And of course, as that project has continued to ramp up, we have continued to record improving results coming from that project. Mina Justa has been ramping up in a very favorable pricing scenario. And the total net income recorded by Alxar Internacional during the quarter was $96.3 million. So a very good performance. Sonacol, which is the pipeline division has been trending up in its results, in line with recovering volumes transported through the pipelines, CLP 5 billion registered for this quarter. In the case of our fishing division in [ Igemar ] operational performance was very good during the year in general and that allowed to record a loss still, but much better results than the previous year. In the case of Metrogas and Agesa, which are our natural gas-related companies, results were a bit lower than last year.
With that, we should now be moving to the highlights of the quarter. Just to remind you that we will be taking the Q&A, the question, we'll be taking through the platform. So if you can please text your questions through the platform so that we can tackle them at the end of the presentation. Moving on to Page 29. A brief update on the MAPA project. The MAPA progress was 93%.
As of January 2022, we have continued moving on with the construction work. We have going -- we have continued going on with commissioning and start-up of some facilities. We're already connected to the grid for the new facilities. We have now moved our expected startup date to the end of April 2022. And we have also updated the final estimate for the total CAPEX related to the project to $2.8 billion, most of which has already been incurred. So the new figure is $2.8 billion, having started with a figure of $2.35 billion when we launched the project.
Another piece of news related to the project on January 3, so the beginning of January this year, we have closed Line 1 in the Arauco complex. This is the oldest mill of Arauco, and we have closed the line after 50 years of operation. This means taking out a total capacity of around 300,000 tons per year, which will be replaced and increased by MAPA when MAPA starts up operation. And just to remind you that MAPA has a total capacity of approximately 1.6 million tons per year. So the net increase brought about by MAPA is going to be around 1.3 million tons per year. So Line 1 already closed down and MAPA very, very close to start up operations by the end of April.
We will continue to move on to Page 30, where we are giving some more information on Mina Justa. As we said before, Mina Justa started production in March 2021. By the end of the year, Mina Justa had completed the ramp-up process of the sulfide plant. And we had 54% progress in the oxide plant. We continue to make progress in this oxide facility, and we expect to be totally completed in terms of full capacity by the fourth quarter of this year. During the year, we reached 85,000 tons of production of fine copper. As you are aware, a very positive pricing scenario. And our guidance for 2022 in terms of production is the range 115,000 to 134,000 tons of fine copper. So quite a significant increase with respect to the figure we recorded in 2021.
During this quarter, Cumbres Andinas, which is the company in Peru, which directly owns the project and in which we hold a 40% stake, recorded a profit of $241 million and an EBITDA of $405 million. In 4Q also, the cathode sales reached 6,000 tons and the concentrates were 41,000 tons.
And the process -- the total processed ore reached 2.8 million tons. So all in all, a very good year and a very good quarter for Mina Justa, very good quarter, especially where the EBITDA was more than $400 million. And this is a project where, just to remind you, we started up pretty much according to expectations, even though we built the last part of the project in the middle of the pandemic. We completed a CapEx of 1.6 just as expected. And we have been obtaining a very good operational performance during the first few months of operations of the project. So all in all, a very good year for Mina Justa.
On Page 31, a brief word about an acquisition by Arauco of a shareholding that was in the hands of our partner, Stora Enso. This is a company which owns plantations in Brazil in the Parana area, 49,000 hectares of forestry assets, of which 28,000 correspond to forest plantations. And Arauco invested approximately $52 million, BRL 294 million for acquired 20% of the ownership of this company that was in the hands of Stora Enso. So now Arauco becomes 100% owner of this company, which is called Florestal Arapoti.
Moving on to Page 32. We are highlighting some ESG milestones. First of all, we would like to say that Copec has been making progress -- quite significant progress in terms of positioning itself and driving -- actually driving electromobility progress within Chile and in South America as well. Some milestones that were achieved during these quarters are listed on this slide, Slide 32. We partnered with a company, Reborn Electric, for supplying one of the sites -- one of the mining sites of Codelco, which is the most important mining company in Chile. We have also partnered with Electro Pipau to energize 100 vehicles -- electric delivery vehicles.
And for this, we have set up a charging station, which is the largest of its kind in South America. So we are already owners of one of the largest networks of charging stations in South America. We are one of the largest suppliers for electric buses in South America, and we are now owning this together with our partners. We are setting up this facility for charging delivery vehicles. We have also partnered with Mallplaza for operating a network of charging stations in shopping malls in Chile. Actually, the largest network in Chile. So all in all, we've been achieving progressive and significant milestones to position ourselves as leaders in electromobility.
Together with that, Terpel Voltex has launched its electrical charging station network in Panama by the end of the year, and this is the first network in the country. And we expect to provide for electromobility nationwide with the 10 stations that we expect to build during this year. So very significant progress made in electromobility. In line with this, on Page 33, we are highlighting some investments that we have done through our Wind Ventures, venture capital arm.
We have -- as we have said in the past, the philosophy here is that when -- given that we are facing quite an uncertain scenario in terms of energy transition, we do not know where the energy transition process is going to take us. The philosophy that we have adopted is to -- basically to keep our options open. And part of that involves leading the electromobility process in Chile and in South America, and we saw that in the previous slide. And also, investing in projects and initiatives that might be complementary to the assets that we have along 3 lines, which are energy, mobility and convenience, which are the 3 business lines or sub-business lines related to the position we have in Copec and our energy subsidiaries in general.
So we are looking for initiatives that might be complementary to our existing assets that might allow us to provide our customers with new supply and new options in energy terms and that might help us to develop new skills and learn new skills for us to face the changing energy scenario in a good way. Along those lines, so we have invested in 3 different companies during the quarter. These are companies related to hydrogen production, to electric bikes and also to bus ticketing. All in all, we have completed an investment of $120 million historically through our venture capital arm related to these initiatives that complement our existing assets and allow us to be in good shape and in good position for the energy transition.
Also, in line with the energy transition on Page 34, we have completed our exit from the Mina Invierno coal mine project that we operated during some years in the south of Chile. This project had already closed down operations by the end of 2019. So it was not operating. But we continue to have this stock -- this 50% share in the company. During the quarter, we sold this 50% share to our partners Inversiones Ultraterra. Prior to the transaction, we provided Laguna Blanca, which is the company which held the Mina Invierno project, we provide Laguna Blanca with all the funds needed so that they could go ahead with the closure plan obligations and all the liabilities they have and other commitments that they have for the closing stage of the project.
The financial effect was a pretax loss of $50 million, which adds up with all of the previous impairments that we have got ahead with throughout time in these projects, which we have all communicated to the market. And this is, of course, an operation -- a sales operation that is in line with our decision of focusing in our main areas of activity driven very strongly by sustainability criteria. And also, in initiatives and businesses of relevant scale where we have growth potential and which allow us to boost our presence in new energy to position ourselves in the energy transition process and also help towards the decarbonization of the energy matrix. So with that, we have completed the exit from the coal initiative, Mina Invierno.
And finally, on Page 35, we were confirmed in several very significant sustainability rankings. We were listed in the Sustainability Yearbook issued by S&P, which is a very important ranking where the companies are selected because of their social, environmental and economic performance. We were selected for the sixth year in a row to be listed in the Dow Jones Sustainability Index Chile and also for the fourth year in a row for the MILA Index, which also includes Peru, Mexico and Colombia. And finally, the FTSE4Good confirmed us as one of the companies listed in their sustainability index, financial times stock exchange. And here, companies are also selected based on public information available related to sustainability.
With that, we are reaching the end of the presentation. That is what we have prepared for you. And now, we should be able to open up the floor for any questions you might have, which will be conducted by Cristián Palacios.
Thank you, Rodrigo for your presentation.
And hello, everyone. We have the first question coming from Marcio Farid at Goldman Sachs.
This is in forestry. If you can provide an update on the commercial strategy in the dissolving pulp business? And how much do you expect to sell this year? And the second question on paper market in China, if you can comment on margins, operating rates and prices for paper producers? That's the first one.
Okay. I'm going to take that. I'm Gianfranco. Well, regarding the dissolving pulp, I mean our strategy hasn't changed. We have been selling from last year, dissolving pulp, basically in China and India and lastly, Thailand, we have about 2 to -- 10 to 12 clients there.
Last year, we sold about 360,000 tons, so less than capacity of 500,000 because we produce hardwood during the year also. And this year, we are planning to increase the sale of the dissolving because of prices and the margins are better. And we hope that we can probably produce 440,000 tons of dissolving and the balance, some small campaigns of eucalyptus that we do every year, depending on the availability of fiber [indiscernible].
So everything normal. Prices have been more stable. I mean, they came down but only $60, and now they're coming back again. They are roughly about $960 per ton for dissolving pulp. So very good margins compared to the alternative of producing hardwood.
In terms of the paper market in China, well, I don't have a lot of visibility over the margins of our clients. Of course, the demand has been good. They have been able to increase some prices, but basically in paper, not in tissue and tissue is more difficult as we explained in the Arauco conference call because there's more competition to tissue.
So probably with the increased -- recent increase in margins -- sorry, in pulp prices, their margin has been squeezed because sometimes it's a bit harder to increase paper prices. But I don't have numbers in terms of how their margin behaving right now. But the market at least, the demand for pulp continues to be strong because some logistical problems of supply that is helping the increase in prices that we have seen this quarter.
Thank you, Gianfranco. The next one comes from [indiscernible]. If you can provide some color regarding the wood business. And if you expect to post in 2022 a similar EBITDA compared to 2021?
Well, we hope, but we cannot assure that we're going to get a similar EBITDA for 2021 because it was a very good year. I mean, it was [ considerably ] very good in terms of EBITDA, demand, operation. Operation because we operate our mills at 100% capacity for the whole year.
This quarter has been very good also, and we expect that momentum continues at least for second quarter. We cannot tell anything right now for the second half because, I mean, we cannot be sure that things continue to be good. We are seeing some weakness in Brazil at this point. The only sign that we can say that things slowing down a little bit. But the rest of the market and the biggest market that we have in North America is still going very well. And so, we hope that we continue the good momentum for margins for the wood products division.
The next question also in forestry. We have [ Lucas Yang ] at JPMorgan, asking on the reasons for the MAPA delay and what are the risks of new delays going forward?
Well, the main reason for the delays that we have been explaining for some quarters now is the effects on the construction companies because of COVID restrictions. I mean, contagious and all the less productivity that you have [indiscernible] construction. We have had a lot of people, almost 10,000 people working on the site and that's to be very difficult and very challenging to continue production.
So we have 4 construction companies working at the site. And of course, we depend on the 4 of them to complete the construction. Our estimation at this point is the end of April. Of course, we cannot be sure that it's going to start producing at the end of April. Things can happen in this 2 months. And of course, there's always risk of further delay, but the delays would be very small because we are almost completing. So if we can delay, it's going to be 1 month or something like that.
We cannot -- it's very difficult to predict certainty in the start-up, but we hope that we can be producing for the next quarterly call that we're going to have.
Thank you, Gianfranco. Please remember to send your questions over the platform, please. And it seems like another one is coming, [ Enrique Grau at Credicorp ] Capital. If you also, Gianfranco, can give some color on MAPA's CapEx increase?
Okay. Yes. In terms of the CapEx increase is basically a construction cost. I mean, on the equipment, we were able -- even to obtain the equipment at a lower cost than the budget, but the main increase is by far the cost of construction because we -- of the delays, you still have fixed cost and all the increase has been in the construction contracts. That is the basic increase in the budget.
Thank you, Gianfranco. We have a question in fuels, Leonardo Neratika at Bank of America. If you can comment on the current pricing dynamics for fuel business? And if you see any risks in passing through the current higher oil prices?
Yes. Thank you. This is Rodrigo, again. Of course, we are subject to a pricing scenario where oil prices have continued to go up during the first 2 months of this year. This has some effects in our performance. First of all, we should see an inventory revaluation effect, which should be positive because of the upward trend as we saw during the last 2 months of the -- of last year. But at some point, as you well say, I wouldn't say there's a risk of not being able to pass through because commercial margins in fuels are very, very small. These are very low margins at very low margins, a high-volume business. So it would be very -- margins are usually very stable over time.
But what we could begin to see is that at some point in time, there's an elasticity of demand. So when prices are very, very high, we could eventually see some impact in the volumes demand. So that is, I would say, rather than the margin, which is very stable over time, there could be a volume risk because of the very high prices.
Probably good news in that regard in Chile at least is the fact that the government has announced a complement for the pricing stability fund that operates in Chile, which will allow for a further CLP 50 per liter approximately increase without hurting the final customers. So that could allow for some additional increases in prices without hurting the final customers. But yes, we could, at some point, see some effects in demand.
And a follow-up question from [ Leonardo. ] Some color on the FIFO impact that you expect in this first quarter? And what was the level for 4Q '22 -- for 2021?
Yes, that has turned out to be quite a significant effect over time. As you well know, this is a business that, among its characteristics, has the fact that the margin -- the commercial margin is very low and very stable, but there are some effects related to inventory revaluations, which were actually very significant during the last quarter.
In the last quarter, we recorded for Chile and Colombia approximately between $25 million and $30 million, I would say, of FIFO effect. So a large part of the increase in margin over the previous -- the comparable quarter of the previous year is explained by the inventory revaluation effect.
It is too soon to tell for the current quarter -- for the ongoing quarter, especially in light of the fact that prices have been very volatile over the last few days. So it's too soon to tell. But most probably, we will once again, have a positive effect because of the upward trend that we have been seeing over the last few weeks.
Thank you, Rodrigo. The next one comes from Jens Spiess at Morgan Stanley. He has 2 questions. One -- and the first one, if you can provide some guidance for CapEx in 2022, sustaining versus expansion CapEx? And the second one has to do with the fact -- mainly, if you see some cost inflation trend in any of the company's divisions?
Yes. Regarding CapEx, well, we are gradually coming out of a very significant expansion phase that we carried through for several years and where we invested above $2 billion per year. And in that period, we carried out several significant investments, such as MAPA and Mina Justa, of course, but also [indiscernible] model and other assets that we had acquired before.
In 2020, we -- in 2021, we ended the year with, once again, a figure very close to $2 billion. And for 2022, we're expecting less than that, definitely. Our current estimate is approximately $1.8 billion. We're precisely working on the exact numbers and we'll probably be issuing a more precise estimate in our shareholders meeting as we usually do. But it's around $1.8 billion, and that is comprised of, as usual, a base of maintenance CapEx, which is approximately $700 million to $800 million, which are the recurrent maintenance expenses and some additional projects, which, in this case, the bulk of them is explained by the remainder of the MAPA project plus some plantations linked to MAPA and other plantation growth. And the rest is explained basically by other smaller projects related to expansions, efficiency and optimization, many of which had been postponed during the pandemic, and we are deciding to carry them forward.
Thank you, Rodrigo. Next one also in fuels. This is regarding Mapco, Leopoldo Silva at LarrainVial asking, an update on Mapco. This was a growth platform in the U.S., this business, asking if that has changed lately? And if there are infrastructure assets still for sale in the company?
Yes. When we first acquired Mapco back in 2016, we saw 2 most important components of the rationale for going into that business. One was the fact that it was a weak performer with respect to the rest of the industry. And if you saw all of the operational -- most important operational parameters for a fuels division in the U.S., it was well below the industry average in most parameters. And the second one was the structure of the industry in the geographies where Mapco operated was very disaggregated. The supply was very disaggregated.
We have made very important progress in the first rationale. So we have been able to increase operational performance quite significantly. And you can see that over time, EBITDA has been trending up very importantly and reaching a high of more than $70 million last year in 2020 and a very interesting figure also of $60 million in 2021. So we have made very significant progress in that first part of the rationale, where we have concentrated our efforts. So we have worked in containing costs and optimizing the network and optimizing the convenience store mix.
The question still remains on whether to go ahead with more M&A. And there might be some opportunities arising because of the fragmentation of this geography, but it's probably too soon to say. We are still focused in operational improvements, as we said during the call. Now we have a very important challenge in labor costs. We still have to do some network optimization, setting up some new sales points, probably closing down some other sales points and focusing in the most important geographies and probably working away from some other geographies in which we are not as strong as we are in our core geographies within the U.S. So still some operational challenges that we have to tackle before thinking of eventual growth -- further growth in the U.S.
I'm going to gather 2 that I have here. [ Enrique Braga ] at Morgan Stanley and [ Rodrigo Garvil ] at BTG Pactual. This is regarding the AFA force in Brazil. If you can provide more detail on what are the plans here? If the company is building forest base for wood products business? Or if you are thinking about a pulp project in the midterm?
No, this 20% [indiscernible] was because Stora Enso wanted to sell, and we have the first option to buy the remaining 20%. So we were already controlling that company and managing the forest. So basically, we have the same amount of forests.
We're going to have, of course, some synergies in consolidating that and probably at some point, merging the 2 companies that hold forests in Brazil. So basically something related to an option to optimize the ownership of that in Brazil.
Thank you, Gianfranco. And also, in forestry, if you can provide an updated pulp production guidance for 2022 and 2023 and how much MAPA will contribute to those numbers? This is Jens Spiess also at Morgan Stanley.
Yes. I mean, with the latest startup of MAPA, we expect that given the ramp-up of the curve, we're going to be producing probably 750,000 tons for the year. So at the end of the year, probably reaching roughly 90% of the production capacity. That's the plan that we have. And of course, for 2023, we expect that to be producing almost 100% capacity.
So we will be, this year, probably producing 4.2 million tons. And the total for 2023 should be around 5.2 million tons once we have MAPA producing at 100% capacity, the whole year.
Thank you, Gianfranco. At this moment, we don't have further questions. So thank you, everyone. I'll turn it back to the operator.
Thank you. This concludes the 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, everyone, for joining in today. We expect to come back to you at some point during mid-May in order to have a look at the results for the first quarter of 2022. Thank you very much. Bye-bye.
Thank you. This does conclude today's presentation. You may disconnect now, and have a nice day.