Day 2 - Empresas Copec

In the afternoon, our education continued at Empresas Copec.  Epreseas Copec is Chile's largest publicly traed company.  It's market capitalization is $19 billion dollars which is more than 10% of the total market capitalization for the entire country.  Empresas Copec is a financial holding compan for their subsidiary business in natural resources and energy. 

Our speakers at Empresas Copec were Sr. Rodrigo Huidobro, the Chief Financial Officer (industrial and civil engineering degree from the Catholic University of Chile and MBA from MIT), and Sr. Jorge Ferrando, the Business Development Officer (industrial and civil engineering degree from the Catholic University of Chile and PhD from La Sorbonne). 

Sr. Huidobro noted that Empresas Copec wants to be in sectors in which they can lead.  Currently they hod the number two market whare world wide in pulp products, the number one market share of sawn timber market in Latin America and 65% of the fuel distribution market which is the largest in Chile. 

They are a financially strong company with an EBITDA of between 1.6 and 1.8 and a debt to equity ration of 0.5.  They have a conservative and healthy financial structure. 

Of their divisions, Forestry accounts for 75% of their assests and 76% of their income, however Fuels account for 76% of their sales.  This is due to fuel being a very low margin business.  Their forestry business is both vertically and horizontally integrated.  The pine trees they grow in Chile grow faster than most places in the world - it takes a pine tree 25 years to reach maturity her versus 100 years in the United States. 

Their fuels businesses are solely distribution companies. They do not produce fuels.  Copec is the largest auto fuel distributor in the country and it consistently outperforms the market in terms of operating efficiency due to their prime locations and extraordinarly high brand recognition.  They hold approximately 60% share of the market. 

Here are some pictures of  us waiting for the bus after the presentation. The picture on the left is of Pam, Selena, Jennifer, and Shontrai from MBAE10 who travelled with us to China.  And the picture on the right is of Shontrai and his friend and our colleague from Indiana University Northwest, Dr. Vernon Smith.