Celulosa Arauco y Constitucion: Capex funding key as FCF stays negative; affirm UW

Research evidence excerpt

Celulosa Arauco y Constitucion: Capex funding key as FCF stays negative; affirm UW

Accessible version

Celulosa Arauco y Constitucion

Capex funding key as FCF stays negative;

affirm UW

Earnings Review

Weak ops + Sucuriú keep leverage stretched 26 May 2026

Arauco reported a weak 1Q26, with revenues down -3% YoY (-2% QoQ) to US$1.5bn and Global Emerging Markets | Corporate

adj. EBITDA down -29% YoY (-23% QoQ) to US$247mn, margin 16.7% (-608bps YoY; - Credit

433bps QoQ). Pulp & Forestry EBITDA fell -23% YoY (-13% QoQ) to US$194mn, as LatAm | Chile

Diversified Operationsproduction declined to 1.1Mt (-4% YoY; -2% QoQ) due to maintenance and ~50kt lost

from unexpected stoppages. Management said issues were solved and expects better Carlos Assumpcao, CFA

2Q26 production. Wood EBITDA fell -28% YoY (-31% QoQ) to US$84mn, mainly on Research Analyst

Merrill Lynch (Brazil)

weaker volumes, partly offset by better prices. +55 11 2188 4025

carlos.assumpcao@bofa.com

FCF burn should continue through 2027 Anne Milne

Research Analyst

FCF was negative US$326mn in 1Q26, mainly due to US$619mn capex (+53% YoY), BofAS

including US$376mn for Sucuriú, partly offset by a US$114mn working capital release. +1 646 855 4096 anne.milne@bofa.com

Net debt rose to US$7.7bn and net leverage to 5.9x from 5.15x in 4Q25, including 50%

GEMS Corporate Credit Rsch

equity credit for local hybrids. Based on our pulp price forecasts, we expect FCF to BofAS

remain materially negative through 2026–27, even after the remaining Copec equity +1 646 855 4096

support, keeping leverage elevated and deleveraging dependent on asset sales, or other See Team Page for List of Analysts

non-debt funding actions.

Rating path relies on funding actions; logistics add capex Exhibit 1: Indicative pricing As of 05/25/2026