Strategy

 

The position attained by Empresas Copec, Chile´s foremost privately owned industrial group, is the concerted result of an efficient cost structure, constant commercial effort and a conservative financial profile. Today, the investments of Empresas Copec are concentrated in two large fields of endeavor: natural resources of the kinds for which Chile has clear-cut comparative advantages; and fuels, which are closely linked with the productive development of the country.

 

Empresas Copec S.A. is a diversified financial holding company that participates through subsidiaries and related companies in different business sectors of the economy. Historically, the parent company was devoted to the distribution of liquid fuels, a core business that was transferred in October 2003 to a new subsidiary that now holds the assets related with this field. Today, Empresas Copec’s investments are concentrated in two large areas: energy and natural resources.

 

A group of Copec companies markets the fuels required by production sectors, homes, transportation, i.e., sales that are considerably linked with the growth and development of the country. Besides fuels, the Company has achieved a major presence in the forestry and commercial fishing businesses and has moved ahead with its interest in becoming more active in the mining business, all responding to Empresas Copec’s strategic view, which seeks to enhance its participation in those sectors of the economy in which Chile offers clear-cut comparative advantages. The positioning attained by Empresas Copec, Chile’s principal privately owned industrial group, is the result of an efficient cost structure, continual commercial effort and a conservative financial profile.

 

The production operations carried out by the Empresas Copec family of companies are primarily concentrated in Chile, a country with a climate that spurs rapid growth of conifers in artificial plantations, and consequently short harvest cycles.

 

The country is also generously endowed with more than 4,000 km of coastline and offshore oceanic waters that have ideal temperatures for the conduct of commercial fishing for pelagic fish. In addition, the imposing cordilleras of the Andes Mountains that form the backbone of the country are a storehouse of high-grade mineral deposits. All of these aspects are fundamental for the development of industries such as those of the Copec companies focused on the use of natural resources. Added to this bounteous natural setting are the Company’s production centers located close to major shipping points, thus making it possible to compensate for the relatively greater distances between Chile and the country’s principal export destinations. In an increasingly globalized world where our Company has to compete with first-class foreign companies, our businesses must optimize their operations, stay close to the cutting edge of technology and be leaders in the evolution of developments.

 

Empresas Copec has carried out major investment programs that have enabled our companies to considerably increase their scales of operations, thus allowing substantial cost reductions to accrue for our operations, hand in hand with achieving increases in efficiency and sound competitive positions to rely on to better aid in weathering the ups and downs of business in economic sectors that are cyclical by their very nature. In addition, Empresas Copec has continually expanded its product and business lines, moving at the right time into new fields of activity that have synergies to offer when combined with existing businesses and where our experience can be put to good use.

 

The investments of Empresas Copec are always made with a long-range vision in mind, seeking to manage and develop the Company’s activities sustainably and with a commitment to our surroundings in the broadest sense of the word.

 

Empresas Copec knows no bounds in the horizons of its business activities, exporting products to more than 80 countries on the five major continents. If it is very difficult to participate in international markets nowadays, then leading them is an even greater challenge. On the domestic scene, the success achieved in competing with companies that are more prominent in the international fuel business has made Copec a leader in the Chilean market and a special case unheard of anywhere else in the world. The Company’s export products have achieved optimum positioning in the most demanding foreign markets as a result of their quality-minded production approach and stringent compliance with international standards.

 

The growing presence of Copec companies on overseas markets is also an outgrowth of our goal to diversify. To reduce its market exposure, Empresas Copec has constantly striven to gain access to new markets and also to increase the amounts of products of greater added value we produce. Accordingly, we have diversified much more than in a geographic dimension alone. We have also expanded the range of products we market and the sources of supplies we use for their production while seeking to limit the dependency of Empresas Copec companies on any of these sources in particular.

 

A fundamental underlying factor of the success of Empresas Copec in sales has been the Company’s quality-of-service centered approach, the result of the continual efforts of highly specialized business teams. Whether in agents’ offices located all around the world or at sales points situated in the most remote localities of Chile, Copec people have the same drive, energy and creativity in bringing Empresas Copec company products to the homes, commercial establishments, transportation operations and industries of our customers.

 

A continual innovative effort has enabled the Company to move to the vanguard in quality of service in order to satisfy the best as possible the integral needs of each of our customers, enhancing all the more the brands and trademarks of our companies.

 

A distinctive characteristic of Empresas Copec is the Company’s conservative policy on indebtedness. In addition to ensuring that the Company can surmount the most difficult periods successfully, the purpose of this strategy is to ensure that available resources are at hand at all times to make key investments in a timely manner. The Company’s low level of indebtedness, combined with the substantial cash generating capacity of our own businesses, allows.

 

Empresas Copec to take better advantage of emerging market opportunities, thereby facilitating the investment process and enhancing our ability to obtain new resources whenever they are needed. Empresas Copec has been capable of generating high, growing amounts of cash flows, which have allowed the Company to finance its investment plan while at the same time distributing substantial dividends.

 

Empresas Copec today is a company that displays positive financial figures on its balance sheets, leads the industries in which it participates, enjoys a sound reputation and brand power, and is in an unbeatable position to continue its contributions to its shareholders, its employees and the country.

 

This position was built up thanks to the values and principles held in common by all of our companies and that have served as their inspiration throughout the seven decades over which our business activities have extended. A distinctive component of this way of doing business is our long-term vision.

 

Empresas Copec invests in areas that have attractive returns to offer over a wide horizon. To do so, it is essential to make decisions with considerable thought put into them and to exercise constant oversight to ensure the sustainability of these businesses.

 

This last point, in the understanding of Empresas Copec, has been the key to the achievement of the Company’s objectives. Sustainability requires considering the interests of all stakeholders in our decision-making. Shareholders, authorities, workers and communities must all have the opportunity to live together within a framework of respect and alignment of interests. To achieve this it is also essential to ensure that these decisions are communicated to all parties accurately and in a timely and transparent manner.

 

This is the spirit that sets each of the Empresas Copec companies apart and is enhanced through their management systems and their people. Our structures of corporate stewardship and personnel policies are aimed at integrating the essential ethical and professional values in each decision our companies make. We are also concerned about ensuring that the interests of management are adequately aligned with those of our shareholders and workers.

 

At the close of accounting year 2017, Empresas Copec had a stock market capitalization of more than US$ 20.5 billion, or an amount representing around 9% of the aggregate shareholders’ equity of all stock companies traded on the stock exchange in Chile. Behind this figure is a sustained track record of creating value, which has made it possible for the real annual earnings per share of company stock to average close to 12% ever since 1987.

 

These figures are simply a reflection in turn of the long-term vision and work of Copec people, which has made it possible to attain market leadership, to grow soundly and to keep up a firm commitment with the Company and the country