March 14, 2013 / 11:36 PM / in 5 years

UPDATE 1-Chile Copec net profit fell by more than half in 2012

* Lower pulp prices, risings costs, higher taxes take toll

* High base of comparison also hurt net profit

* Sales increased 7.7 percent last year

SANTIAGO, March 14 (Reuters) - Chilean industrial conglomerate Copec said on Thursday that net profit dropped by more than half last year on declining wood pulp prices, rising costs and higher taxes on businesses in Chile.

Also weighing on Copec’s bottom line was a high base of comparison due to a $532 million insurance payment the company received in 2011 for damages its installations suffered from a massive earthquake and ensuing tsunami that struck in 2010.

Net profit tumbled 56 percent to $409.57 million in 2012 from the prior year, in line with expectations.

“The drop in operational results is due mainly to lower results in the forestry and fuel sectors ... There was a drop in sales in the wood pulp business, due to lower average sales prices and an increase in costs,” Copec said in a statement posted on the local securities regulator’s website.

Chile’s Congress in September approved changes in tax laws to help fund an education reform. Businesses in the Andean nation now face a higher tax rate of 20 percent and fewer loopholes to evade them, though the rate remains well below Latin America’s average rate of 25.06 percent in 2011, according to accounting firm KPMG.

Sales at Copec, which owns the world’s second-biggest wood pulp producer and the third-largest commercial fishing company, as well as the main fuel distributor in Chile and Colombia, rose 7.7 percent in 2012 to $22.761 billion.

EBITDA, or earnings before interest, taxes, depreciation and amortization, slumped 23 percent last year to $1.559 billion.

Before its earnings were reported, shares of Copec ended 0.6 percent lower on Thursday, roughly in line with the blue-chip IPSA stock index decline.

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