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Hello, everyone, and welcome to the Empresas CMPC Fourth (sic) [ First ] Quarter Earnings 2019 (sic) [ 2020 ] Results Conference Call. On the call with us today are Ignacio Goldsack, Chief Financial Officer; and Colomba Henríquez, Head of Investor Relations.
I will now turn the call over to Ignacio Goldsack, Chief Financial Officer.
Thank you, and welcome, everyone, to our first quarter results conference call. Starting on Slide #3 of the presentation. Results for the first quarter of the year were in line with last quarter, but looking into the business segments results varied. The pulp business continued to be impacted by low pulp prices. Therefore, results decreased on a quarter-on-quarter basis. On the other hand, Softys results improved considerably as a result of increasing demand during March and the consolidation of the Sepac acquisition. Also, there were lower costs related to efficiency and productivity initiatives implemented throughout the year.
The Packaging business also posted good results during the quarter with higher sales volumes and lower operating costs. These results prove our diversification has been successful and reinforces our strategy going forward. Finally, during March, we decided to reinforce our liquidity position. First, we disbursed $400 million committed credit lines and took some short-term debt, reaching $1.26 billion in cash by the end of the first quarter. In addition, we are working on initiatives to reduce our CapEx and expenses for the year. This is all in line with our commitment to maintain conservative financial measures and our investment-grade rating.
Now turning to Slide 4. As I mentioned earlier, pulp prices continued to be weak during the quarter, even though we saw a quarter-on-quarter increase in softwood prices. Pulp production decreased 3% with hardwood decreasing 5%, which impacted our sales volume for the quarter. The Softys and Biopackaging division saw the increase in sales volumes, both quarter-on-quarter and year-on-year, which, together with lower operating costs, boosted their EBITDA figures. As a result, company's first quarter reached $222 million, stable compared with -- to last quarter, but 34% lower year-over-year.
Net income was negative $132 million, mainly explained by the increase in deferred taxes provision in our Brazilian pulp subsidiary as a result of a weaker BRL, which is a noncash effect. The net debt-to-EBITDA ratio reached 3.2x, increasing from 2.8x in the last quarter, but within our corporate policy.
I would like to turn the call over to Colomba Henríquez, our Head of Investor Relations, who will provide more details in our results. Please, Colomba, go ahead.
Thank you, Ignacio, and good morning, everyone. Please turn to Slide 5 of our presentation, where we can see more information on consolidated operating costs and other operational expenses for the first quarter of 2020. Cost of goods sold reached $936 million, a 1% decrease compared to the previous quarter and a 2% increase compared to the previous year. Consolidated operating costs represented 69% of total revenue, stable compared to 4Q '19, and up from 63% in 1Q '19. This 1% sequential decrease was primarily due to lower operating costs in the Softys and Biopackaging division, related to lower pulp prices and efficiencies as well as positive effect of local currency depreciation. This was partly offset by higher cost in the pulp business.
The year-over-year result is primarily due to higher sales volume, partly offset by lower fiber costs, higher efficiency and the positive effect related to local currency depreciation. Consolidated other operating expenses reached $190 million for the quarter, an 8% sequential decrease and a 2% decrease from the previous year, representing 13% of total revenue, slightly lower than the 15% reported in 4Q '19 and above the 13% reported in 1Q '19. This quarter-over-quarter decrease is due to lower administrative expenses in all business division and lower marketing expenses in the Softys business. The year-over-year decrease is related to lower administrative expenses in Pulp and Softys, also lower marketing expenses in Softys. There was also a positive effect quarter-on-quarter and year-over-year as a result of the depreciation of local currencies.
Now moving to Slide 6 of the presentation. We will take a closer look at our pulp business. Pulp production reached 938,000 tons, decreasing 3% quarter-on-quarter and increasing 7% year-over-year. Pulp production was impacted by the scheduled maintenance downtime at Santa Fe II. Also Santa Fe II and Guaiba II had lower operational rate during the quarter. Pulp prices during the first quarter of 2020 reached $557 per ton for softwood and $464 per ton for hardwood, increasing 3% and decreasing 2%, respectively, since the fourth quarter of 2019.
Total market pulp sale volumes decreased by 3% quarter-over-quarter and increase 11% year-over-year. Looking at the quarter-over-quarter performance, we saw an 11% increase in softwood sales, explained by higher shipments to Asia, excluding China and Latin America, while hardwood sale volumes decreased 6%, explained by a lower shipments to Asia, excluding China and Europe. For the year-over-year comparison, sale volumes were up 20% for softwood as a result of higher exports to Europe and Asia and 9% for hardwood, with higher exports to Asia, excluding China, the U.S., Europe and the Middle East.
Third-party forestry sale volumes increased by 4% quarter-over-quarter due to higher volumes of sawing logs, remanufactured wood and plywood, driven by higher sales in Chile. This was partly offset by the decrease in sawn wood exports to China and the Middle East as well as lower pulpwood sales in Chile. Year-over-year, Forestry sale volumes of third parties grew by 9%. During the quarter, we saw a significant increase in pulpwood volumes, with higher sales in Argentina. Also, we saw an increase in plywood sales in Chile, the U.S. and Latin America. Sawing log sales in Chile and Argentina as well as higher remanufactured wood exports to the U.S. This was partly offset by a 12% decrease in sawn wood sale volumes as a result of lower exports to Asia, excluding China and the Middle East. Due to the previously highlighted effects, revenues for the Pulp & Forestry business decreased with 3% sequentially and 19% compared to 1Q '19.
EBITDA was 19% lower sequentially and 58% lower compared to 1Q '19. Breaking down the quarter-over-quarter EBITDA decrease, we can see that it was primarily due to lower hardwood prices as well as lower hardwood pulp volumes, partly compensated by higher volume and prices of softwood pulp. In addition, there were higher operating costs related to forest protection and lower operational efficiency. In the year-over-year comparison, the decrease resulted largely from lower pulp prices, which decreased 33% for softwood and 31% for hardwood. Higher pulp sale volumes partly compensated the negative effect of lower pulp prices, together with lower maintenance costs. It is important to mention the depreciation of the BRL, the CLP had a positive effect in cost and expenses during the quarter.
Now moving to Slide 7, we will take a closer look at the Softys business. Softys revenues decreased by 2% quarter-over-quarter, and increase by 10% year-over-year, reaching $545 million. Tissue paper sale volumes increased 9% compared to the previous quarter and 25% compared to 1Q '19. Quarter-over-quarter, we registered higher sales volumes in all markets, highlighting Brazil as a result of the consolidation of Sepac, and higher volumes in Chile. Year-over-year, the increase was also a result of higher sales volumes in most countries of operations, highlighting growth in Brazil, Chile and Argentina.
It is important to notice that the COVID-19 pandemic generated an increase in tissue demand products in all the countries of operations during March.
Personal care products sale volumes grew by 6% compared to 4Q '19 and 18% compared to 1Q '19. The quarter-over-quarter increase was due to higher wet wipes volumes in Chile, Peru and Uruguay as well as higher feminine care products in Argentina and Uruguay. In the year-on-year comparison, personal care sale volumes were benefited by higher sale volumes in all [ countries ], with significant increases in diaper volumes in those countries as well as wet wipes in Chile and Peru. Average prices measured in U.S. dollars were down 6% for tissue paper and 11% for personal care products compared to 4Q '19. The decline in prices is related to the depreciation of local currencies, partly compensated by local currency price decreases prior to the start of the current health crisis.
Softys EBITDA reached $86 million during the quarter compared to $64 million in 4Q '19 and $32 million in 1Q '19. EBITDA margin reached 15.8%. The quarter-over-quarter increase relates to higher sale volumes of tissue paper and personal care products as well as higher prices in local currencies. Also, there were lower operating costs as a result of increased efficiencies and local prices. And also lower SG&A, driven by lower marketing expenses.
The year-over-year increase is related to significant increases in volumes of tissue paper and personal care costs. In addition to lower fiber costs and the efficiency and productivity initiatives implemented throughout the year. This effect, both quarter-on-quarter, were compensated by the negative effect of local currency depreciation.
Also, it is worth mentioning that the consolidation of Sepac was approved on October 31, 2019, and therefore, affects quarter-over-quarter and year-over-year comparison.
Let's move now to Slide 8 of the presentation to see further details on our Biopackaging results. Sale volumes to third parties increased by 4% quarter-over-quarter as a result of higher volumes of corrugated paper, corrugated boxes and molded pulp trays related to the pulp season in Chile, compensated by a decrease in paper bags with lower sales in Peru. Year-over-year, volumes increased by 9% as a result of higher sale volumes of boxboards, with increased exports to the Middle East and Asia and also higher sales of corrugated paper. This was partly offset by lower sales of fruit boxes in Chile and lower paper bag sales. Average sale prices decreased by 2% sequentially and 13% annually. As a result, revenues increased by 2% quarter-over-quarter and decreased 5% year-over-year, reaching $224 million. The Packaging business EBITDA reached $24 million, doubling compared to 4Q '19 and decreasing 14% compared to 1Q '19. The sequential increase is mainly related to higher seasonal sales volumes of corrugated boxes and corrugated paper as well as molded pulp trays. Also, there were lower operating costs related to lower fiber costs and higher productivity in boxboard and corrugated paper. The annual decrease is mainly from lower corrugated sales as a result of lower prices as well as lower paper bag volumes in Peru. These effects were partly compensated by lower operational costs related to lower fiber costs and higher boxboard sales and efficiencies.
Ignacio will now go over our financial position. Thank you, all.
Thank you, Colomba. Please turn to Slide #9. Free cash flow was positive $102 million during the first quarter. This is the result of the lower CapEx as well as the lower dividend and tax disbursements. Working capital was also positive during the quarter as a result of lower inventories. During the first quarter also, as I mentioned earlier, we implemented some initiatives to reinforce our liquidity position. Therefore, our cash position increased to $1.26 billion, while our total debt increased 18%, reaching $4.6 billion. Despite that, our net debt figure remained stable compared to the previous quarter, reaching $3.3 billion.
Now moving to Page #10. In the current situation, to take care of our people, ensure operational continuity of our business units, execute initiatives to help others and to maintain a strong liquidity position are priorities for us. We will continue working on the operational efficiency and productivity initiatives we have been implementing during the last years. We remain fully committed with the execution of our long-term strategy and also to maintain a conservative financial structure. We know this is the right way to look into the future, understanding that we are facing a volatile environment.
Now I would like to mention that this is Mr. Francisco Ruiz-Tagle, CMPC's CEO; Mr. Raimundo Jose Varela, Pulp Commercial Director; and Mr. Felipe Arancibia, Softys CFO, are also joining the conference call. They will be available to answer any questions you may have.
Operator, please open the floor for questions.
[Operator Instructions]
Your first question comes from George Staphos from Bank of America.
I hope you're doing well. Thanks for all you're doing with COVID. My question, maybe a couple of parts to it. Can you talk about your observations in terms of trends in China on pulp, particularly on hardwood, if you can comment and on the pace of pricing in the market. And then my related pulp question, I'll turn it over. The press release discussed higher costs related to operational performance in pulp. I'm guessing part of that might have been just the outages or reduced production at Guaíba. But if you can talk about what was behind that and perhaps quantify it.
Ignacio, I can take the first part of the question if you want.
Yes, Raimundo, please.
This is Raimundo Varela. And you asked for about trends in China, hardwood. I think, well, the first quarter, the prices were flat in hardwood, the in China and almost everywhere, and the demand was very good throughout the quarter. We were expecting some pickup in demand in February due to the COVID in China and in Asia, but that didn't happen really, at least for us. We saw good demand a little bit later in February than normal, but we were able to place all our volumes in February. And then in March, it was also strong, very strong, I would say, in demand in China and in Asia, and that is what make us thought that it was time to increase prices in hardwood, and we were able to do that during April. We increased between $20 and $30 across Asia and across China for hardwood. And therefore, in our opinion, the market is well, the demand is relatively good, overall. No doubt that in some segments, like the tissue, of course, which is very strong everywhere in China, but also everywhere because of higher hygiene now because of some panicking buying now at the retail level in several markets. And no doubt that also some products are weak, [ and I think are rising ] and then the specialties and the packaging are sort of a mix, mix bag, I would say. Some segments are higher and some segments are low. But overall, we see good demand. I think these crisis, so COVID has made that the price increase has been a little bit delayed. Now we were maybe expecting to increase prices in March, and we had to do it in April. And maybe the size of the increase was also maybe a little bit smaller than what we would have thought of at the beginning of the year. But I don't think it changed the tendency. And in long fiber, I think the situation is even tighter. I think we had price increase in February and also in April.
And it's cited because of the supply disruption and because of the Finnish strike and the Canada fiber availability issue with that as well.
And on operations in terms of Santa Fe and Guaíba, was that the issue in terms of the operating costs? Or was there something else?
George, this is Francisco Ruiz-Tagle. First of all, very -- first of all, thank you very much for your comment about our COVID-19 initiatives. We appreciate that. In connection with the costs, you are right, I mean, we actually had some unstability in Guaíba, during the first 2 months of the year, very much connected with the lime kiln, we had some problems there. So it created some extra cost, basically because of we have to acquire lime from outside. And the problem was totally solved and the mill is running normally. This is one of the problem we had in Guaíba. Actually, some stability and we created probably some extra 2%, 3% extra cost per ton for -- because of that. And in case of Santa Fe, we also had some unstability connected with the evaporators during in the first quarter. And again, I mean, more than -- during the first quarter, it was during the part of February and March, and now I mean the problem was solved and it's running pretty normal. So I have to say that every mill is running very regular today.
Your next question comes from Jon Brandt from HSBC.
I guess my question is really about tissue and the demand that we're seeing. So obviously, it was very strong in the first quarter, but COVID also hit Latin America later in March. So I'm wondering if you can sort of discuss what you're seeing in terms of demand into April and then into May. So how much incremental capacity do you have to meet this incremental demand that we're seeing? And how we should think about potential price hikes in the tissue segment. You're very careful to point out in your press release, but the price hikes that were announced versus previous prices. I'm wondering, so given some of the cost pressures that you're seeing in the currency in the fiber side, what we should think about in terms of tissue prices. If I could just sort of follow-up on the first question, the price hike, the $20 to $30 price hike that you announced for hardwood in China, is it fair to assume that, that's been fully implemented across all?
Thank you for your question. This is Felipe Arancibia speaking. So related to our volumes in the first quarter. In Tissue and Personal Care segment, the coronavirus pandemic results in a sharp a increase in sales in March 2020. As a result of a stockpile among consumers and distributors. But on the other hand, away-from-home is being negatively affected by prioritized reduced travels, took a rest from visit, a less activity in the health system, which has been in help to attend just coronavirus patient. We're seeing more people in working from home, as you well know. Moving forward, it's very difficult to say because there are a lot of factors this year, but we expected both tissue and personal care business versus impact in sales by third party in March on a slowdown in away-from-home along with let's move in flexibility in the population. However, in long run, I would say that we believe the coronavirus pandemic will lead to increased demand for hygiene health products due to a greater focus on hand hygiene and through this increase in cleaning bathroom and common places because. So we are getting prepared to take a bunch of these new trends. So I would say in the long run, we're expected to -- our volumes sales would be stabilized.
And related to your other question for our freeze prices commitment, most of our products are first mid and during the crisis, we communicated that we will not rise their price to keep them affordable. As you well know, we don't disclose price projection. However, having said that, we are facing quite a strong press in cost, currency depreciation, the raw materials in personal care products on hold. So under our revenue management program, we are making some research in order to set our medium-term pricing strategy. Having said that, in local currency, we have been able to increase price according to the local inflation, not as much as the devaluation in currency, but in the local currency it has been to catch up the inflation.
Yes. There was part of the question regarding -- there was anything related to -- the question regarding to the pulp prices in China or not? Did I understand correct?
Yes. So yes, I just wanted to clarify that, the $20 to $30 price hike that you announced on the hardwood side and has that been fully implemented across your clients? Or are you still attempting to [indiscernible] some of those increases?
Yes, I think the $20 or $50 increase is justified because, I mean, several things. Now that stocks have been coming down everywhere. I think that the pulp demand is sort of very much supported by the tissue demand everywhere, and I think that we have 2 things: One is the actual higher tissue consumption or higher tissue buying; and then in some geography, the U.S., Europe, Latin America, the difficulty of getting in recycled fiber, okay? That's not relevant in China, but it's relevant in the rest of the world. And that is becoming a big issue, and I think that supports this price increase, I think. And I think in the other segments -- some of the other segments, let's say, in the packaging, also the fruit, everything related with fruit packaging, fruit label that has been booming, pharmaceutical packaging, pharmaceutical label has also been booming. So the other segments are a little bit more mix. But also, we see good demand from some segments as well beside this.
Your next question comes from Thiago Lofiego from Bradesco BBI.
Two questions to you. Raimundo, just to understand here, do you think this hardwood pulp price hike was more of an opportunistic thing, given the potentially temporary strong demand for, especially for tissue in China? Or do you see this as an uptrend or like continuing in the coming months? So are you seeing, effectively, tissue demand continuing on a very strong pace as you had seen, as you saw in March? And basically looking at the market dynamics, do you think that market dynamics continue to be tight in the short term. Also, within that question, thinking about premium riding demand, right? It's been we've been hearing that it's been quite weak in China. And also, we heard about recent price declines for premium ridings. So do you see that as a risk for the recent price hikes would -- so do you see a risk of you guys having to take those hikes back? And then another question, maybe for Ignacio, looking at the M&A opportunities, be it in tissue or in other paper grades in LatAm. Do you see any opportunities arising because of this different context that we're living in? Or you guys are not really looking at anything within that theme right now.
Thank you, Thiago. This is Raimundo. I think that the dynamics in the pulp market are such that no doubt that there is -- there're risks, and no doubt that there is risks. But [ it's in writing its note ] is weak. The prices have been coming down. In China has been some curtailment of production that's now in several geographies. And that is a risk. Now however, I think there's a few relevant things here. The tissue demand has been very strong in February, March, April in Asia. Now it's coming back to normal, but I think the normal -- the normality is higher than before because there is higher hygienic standards. And I think in the rest of the world, we are -- April was also very strong, and maybe in May, also going to be very strong in tissue, and I think we would expect that to be more normalized from June onwards. And then -- so I think that the trend of price increase is here to stay, but at a slower pace than what we previously anticipated. So I think if you look at the full year, I think we will -- we do not expect prices to come down. We do expect prices to increase at lower pace than before. I think that the -- there is also, of course, the economic risk related with the export industry. I think that is also going to have an impact. But at the same time, pulp prices are so low, at such as at the low level that many producers are losing money. I mean, if you look people that import wood chips, now I have no doubt that they are losing money there at this level and all. And same situation for producers in Europe -- many places in Europe than in the U.S. So that's our -- my take of the situation.
If I may, just add one here, looking at seasonality. Do you think that will play a role this year or because of the lockdowns and the different timings of the lockdown in different regions, we are going to see kind of like a confused seasonality pattern during summer months.
No. I think, it’s a little bit is still relevant. I think Q3 is going to be difficult in that sense will be the most difficult quarter probably. At the same time, I think that this lack of recycle or difficulty to getting -- obtaining recycled fiber is becoming an issue and even more in Q3, I think. So I hope that we compensate the weaker demand that always come from the summer. But no doubt that Q3 will be the most challenging one.
Thiago, this is Ignacio Goldsack. Our long-term strategy continues -- remaining the same. But as I mentioned, now the priority is that to be prudent, right, and focus the effort in protect our workers, operational continuity in our mills, of course, efficiency initiatives and maintain strong liquidity. That's the main priority up to now.
Your next question comes from Carlos De Alba from Morgan Stanley.
So on the profitability of the pulp business, a couple of questions. One is on the cost side. When I looked at what you reported in terms of BEKP as well as BSKP cash costs in the press release, they are both down quarter-on-quarter and year-on-year. However, in the explanation of the pulp business presentation, you are calling or you're discussing higher operating costs related to forest fire prevention. Could you please maybe quantify how much money have you been spending or have you spent this year in fire prevention relative to prior period? And also whether or not the expenses related to fires are included in the cash cost for pulp. And then on the other hand of profitability, I'm sorry to go back to this question, Raimundo, but you mentioned to a question earlier, that you believe the conditions are such that the price increase should take place. But can you confirm that, effectively, the prices in April have increased by $20 to $30, or is this just what you are still negotiating with the customers? And will you -- and also, this morning, there were reports in the industry press, suggesting that CMPC has lowered the previously offered prices by $20 for hardwood in Asia. Could you comment on that?
This is Francisco Ruiz-Tagle. Regarding your first question on forest fires. It is true. I mean, we -- this year was a -- so we were not very much affected compared with the last year. We had some more [ sectors ] affected, but in terms of number of fires, we had about 30%, even more -- of more fires during the year. So it created some more expenses during the year. In terms of the total amount, we spent, during the fire season, it's around $30 million. This is including protection, prevention, we are including more helicopters for fighting fires, and so that is the reason why we haven't spent more this year. It has to be with the more fires during the -- during the -- during our summer even during April, that it was the last month, we had an important number of fires -- still important of fire. But now since I would say, mid-April, the fires stopped. So this is my answer for that.
I can take the second part. I can definitely confirm that we have increased our prices in Asia by $20 to $30 in plywood, all over Asia: China; Korea; Japan; Taiwan; Southeast Asia; India; and we -- no doubt that we have to negotiate hard, but we were able to achieve that and tissue customers were the first one to accept that. And then slowly, we were able to convince to other customers, that the situation has slightly changed and allow a small price increase, but what I would I will label this increase. This is a small price increase. But it significantly because it was quite a long time since we were able to increase prices at peak, so it is relevant, and I think very sustainable. And I haven't -- I mean, I kind of comment in the report that we have reduced the estimate, that's not just not correct. We have maintained our prices in May so far in Asia, and we are negotiating a price increase in Europe and in the U.S. and in Latin America in May because we also believe that the conditions are there for the -- which I would name as a small increase of price in...
Understood, Raimundo. And if I may, just maybe can you help us understand or reconcile the fact that [ FOGs ] for Asia or for China-only increased about $8 during April, vis-à-vis the $20 that you guys were able to implement?
No, I think during -- usually has a few delays. I would expect that for the next week. Probably you will see a full reflection of the increase. Now I cannot comment that every single supplier have necessarily increased the same amount. I think some suppliers have agreements that basically previous months, et cetera, et cetera, some of the price flow early in the month, if you close your business early April, probably close unchanged. What we did in April that we negotiate throughout the month. And the larger part of the business was done at the very end of the month. So I think for the fig, you have to wait until it will reflect it. But in my impression it will.
And sorry to have another one, I really apologize, but taking the opportunity. Are you able to comment, in rough terms, how -- what is the percentage of your customers in China that accepted or to who you were able to implement the price hike upon? Was it 100%, 70%?
95%.
95%. All right.
Your next question comes from Alfonso Salazar from Scotiabank.
The question I have is, once again, on Softys and margins you've shared, more in the medium and in the long term. And the question is because so of the negative implications of this pandemic on consumers, particularly in some countries where employment income can be very hit, severely hit. So how large do you think is to increased prices in such countries that experienced big depreciations and recover some of the margin, especially, I think, if pulp prices eventually start to increase in dollars. So if you can share some sense on how sensible is the consumer to the price hike, or if you are already seeing some trade down from consumers. Any color on this would be very helpful.
Thank you for your question, Alfonso. This is Felipe Arancibia speaking. So as you well know, it's very difficult to say due to the uncertainty in our pricing and impact in our sales volume. Having said that, we are trying to be focused on -- in our efficiency to address, in a better way, our operation and to maintain, due to our operational efficiencies, the way to serve our customers and consumers. Having said that, we have a broad portfolio of products, whether in tissue, personal care and also in away-from-home to serve in the better way this necessity. So in -- let me put it this way. It's very difficult to see and to say how we're to be in the [ fit of ] trends. However, we are focused on our efficiency to serve in the better way our consumer customers.
The question comes from Sebastian Ramirez from Bank Chile.
My question is in regards to Softys. When we see the margins quarter-on-quarter, the improvement on those is very impressive. Nevertheless, it got my attention that you cannot explain -- first is that there is a huge drop in the raw materials impact, quarter-on-quarter. Nevertheless, we see the pulp prices relatively flat quarter-on-quarter or with a small price drop. So if you can explain what was behind that very sharp decrease in broad cost? And the other thing is that looking at the segment information, there is other expenses that decreased meaningfully during the quarter. So just -- there's a lot of moving parts in order to understand why this drop in cost was so profound. And if you can explain that, how sustainable that cost drop, it is -- that will be for my side.
Thank you, Sebastian, for your question. This is Felipe Arancibia speaking. As you know, we don't disclose future targets. Having said that, our business, highly related to the agility growth, raw material price, and as you mentioned before, we have to send a, let's say, a positive impact in the pulp price. Having said that, the most important impact in our cost has been in our efficiency. We have a really robust program related to procurement and also the efficiency to have some benefits in the last quarter. And also, as you know, we are quite related to the foreign currency. So due to the uncertainty that we are facing, it's difficult to say so, looking forward. However, we have been in a company focusing on growth on a profitable basis, and we are trying to continue to do in this future.
Okay. And I had a follow-up, can you give us a sense of what was the EBITDA contribution from Sepac acquisition during the quarter?
As you well know, we're continuing the range that we disclosed before. In the range of USD 30 million to USD 40 million, and we hope to be in the up -- in the range of the core -- per year.
Your next question comes from Marcio Farid from JPMorgan.
Ignacio, Colomba, Raimundo, I have a couple of follow-up questions. The first one on the pulp production side. There has been obviously a challenge on keeping up pulp production over the past 6 months, initially, with the protest in Chile and now with the COVID-19. But CMPC has been kind of immune to this, and able to keep production running, right? You just mentioned that all the mills are running normal now. I'm just trying to understand what are the production risks that we see today, especially related to COVID-19. Our sense is that the worst is past, but I just want to hear from you if you're comfortable that you can keep production and maybe reach the 3.5 million ton third-party sales this year as well. Raimundo, a follow-up question. When you talk about the $20 to $30 price increase, sorry to go back there, can we try and be more clear on the price level? Are we talking about an increase from $450 million to $470 million, $470 million to $490 million? What's the latest price in China, please? And maybe the last one, on the pulp production side, on cost as well. Considering the recent oil price and FX move, can we see full production costs moving how much lower over the next quarter, especially with the oil price?
Okay, thank you, Marcio, this is Francisco. Regarding the first part of your question, on the production of our sites. It is true, we're actually, fortunately, operating in a very regular basis. And as we said before, we have been very smart in charge of taking care of our people. Because of this, we implemented during the beginning of March, a very robust internal protocol that is helping us in taking care of the people and our operational continuing. This is mandatory, we're tracking the protocol on a daily basis. We also are, for instance, implementing longer working shifts, meaning that is less people is coming every day to the mill. And so we are protecting some shifts out of the mill in order to take them in case if we need that, and protecting the people in that sense. So less people in the mill, and checking temperature and giving all the protection that we need for continuity. The other thing is, I would say, that in terms of raw material, for instance, we are receiving every raw material in a very normal way. Chemicals, of course, the forests are running not in a regular basis. And so in general terms, I believe that we feel, in some way, very well organized during this time, although we know and understand perfectly that there are a lot of uncertainty. But until now, we have been operating regularly, and I don't see any particular impact in that, except we have any infection or any problem in one of our facilities. But for now, it's okay.
And you asked also about costs. While we are not projecting cost, but my response in answering that is that we don't feel that we could have no problems in terms of having higher costs. Actually, the price of fuel, of the oil, it probably will help us in terms that we use oil for producing -- for harvesting and transporting forests, for instance. And also, they will impact the delivery cost, the logistics cost. So in that sense, we should be receiving some help on that. And the rest of the cost, in general, there are some of the costs even that are in local currency, that will be also affected because of the devaluations. And in this case, some help in that.
And regarding your last part of the question, yes. Regarding the last part of the question on the price leverages, we were at $460, and now we are $470 to $480, of the level in China, hardwood.
Your next question comes from Leopoldo Silva from LarrainVial.
Guys, my first question is regarding your CapEx? What are you seeing to be your CapEx for the year in the face of the currency depreciations? And what should we expect in a normalized terms, going for the -- into the future at these kinds of depreciation? And next, very quick, your tissue margins in Argentina -- I mean your tissue margins, overall, what exchange rate for Argentina do they consider? Is it the official, or is it the -- what you can find maybe in the street that's probably double right now? And into the future, at what rate would you be able to bring those funds back for dividends?
Thank you, Leopoldo. I mean in terms of CapEx, this company normally consider around a $500 million in CapEx per year. This is what we normally have. It was our original for this year. And because of the situation and the uncertainty, and although we have a very healthy liquidity today. But also we -- even considering that, we decided to reduce our CapEx in some percentage. And basically considering that we will continue with our strategic projects, which is less strategic, will not be considered for this year. It means that probably, we will be in the range of $400 million or probably less than that.
And related to your second question. Leopoldo, this is Felipe speaking. As you know, we don't communicate future targets on that on margins. So as I said before, so I say that, especially for Argentina. And related in Argentina, we use the official exchange rate and not the -- and your last question was related to the dividend. We don't bring our dividend from Argentina.
So you expect into the future, I mean, to be growing? But to understand well, you mean like never going to bring back money from Argentina?
We are not considered because we are investing in Argentina. We have a lot of things to do there so far. So yes, we are not considering that so far.
Thank you. And that seems to be our last question. I'll turn the call back over to Ignacio for closing remarks.
Colomba here. I would like to thank you all for connecting for today's call. I hope you have a great day and a nice weekend.
This concludes today's conference call. You may now disconnect.
Thank you