SANTIAGO Chile's largest industrial conglomerate, Empresas Copec, will focus this year on reaping the fruits of its multibillion dollar investments before looking at acquisition opportunities, a shift that will benefit its finances, the company's chief executive said.
Over the last three years, Empresas Copec COP.SN and its units have made $4.8 billion in investments, including the Montes del Plata joint-venture pulp mill in Uruguay, the purchase of wood panel firms in Canada and the United States, and the acquisition of fuel company Terpel.
"We're completing a phase mainly focused on investments ... Today our focus, more than thinking about new investments, new countries, is thinking about consolidating the tremendous effort in investments we've made," CEO Eduardo Navarro told the Reuters Latin America Investment Summit on Thursday.
Empresas Copec, which owns the world's second-biggest wood pulp producer and the third-largest commercial fishing company, as well as the main fuel distributors in Chile and Colombia, also has operations in Argentina, Brazil, Canada, Panama, the United States and Uruguay, among others.
Navarro said that the consolidation of its investments will allow the company to improve its debt indicators, and provide it with the financial resources for its operations this year, making external financing unnecessary.
"We expect our financial indicators will improve during the year, which will allow us to generate a financial cushion. We don't need to (issue) ADRs or any special financing for our investments. Our investments are financed," Navarro said.
Empresas Copec, whose first quarter net profit jumped 55.1 percent to $238.7 million, expects to invest $900 million this year to boost its operations.
The industrial conglomerate has a market capitalization of about $19.20 billion, making it the second-largest company on Santiago's stock exchange.
Regarding the Montes del Plata pulp mill, a joint venture between Finnish paper maker Stora Enso (STERV.HE) and Empresas Copec's pulp unit Arauco, Navarro said wood pulp from the plant could start being sold on the market in the last quarter of 2013. Montes del Plata is slated to kick off operations in the third quarter.
The wood pulp business continues to be attractive and has plenty of room for future growth, according to Navarro, as per capita consumption of paper products is still relatively low in emerging economies with large populations such as China and India.
"The fundamentals are still there to keep investing in these big wood pulp projects," he said.
Though growth in China, Chile's main trade partner and the world's biggest commodities consumer, is showing signs of slowing, the strength of the Asian giant's economy continues to support global demand.
"It's not necessarily as negative as some people perceive it to be, because (China's economic) growth of 7 percent in of itself is still strong," Navarro said.
Navarro said that Empresas Copec's investments in Canada and the United States have been strategic and the company will look to consolidate its production and commercial operations before looking at new potential acquisitions.
"We had a commercial presence in the United States, now we also have a hugely relevant production platform in Canada and the U.S. and the challenge today is to optimize their operations and integrate them into the company's value chain," Navarro added.
In its fuel unit, Empresas Copec will remain focused on distribution, and isn't currently considering entering other business sectors, such as refining, the CEO said.
(Reporting by Anthony Esposito and Fabian Cambero; Writing by Anthony Esposito; Editing by Diane Craft and Lisa Shumaker)