Masisa S.A. Posts Q2 2007 Financial Results

Sales in the second quarter of 2007 were 10.8% up on the same period of 2006, amounting to US$241.9 million, driven by higher prices of wood boards for furniture (MDF and PB), which offset the lower sales of MDF mouldings, finger joint mouldings and sawn wood, all products from the solid wood business unit, due to the slowdown of the housing sector in the United States.

The gross margin on sales improved, increasing from 22.1% to 23.9% compared with the same quarter in 2006, mainly driven by the Company's ability to transfer more than its cost increases into prices, especially in the wood boards business. Also, the Company has been successful in its commercial efforts of opening new markets and re-routing exports that were initially destined to the United States towards other markets; this is especially true for OSB boards' exports.

The ratio, of sales and administrative expenses to sales, improved in the second quarter of 2007, accounting for 13.5% of sales, which was slightly lower than the second quarter of 2006 when they accounted for 13.8% of sales. This was mainly due to an increase in overall sales along with a better and more efficient commercial activity.

Operating income increased by US$7.0 million (+38.6%) when compared to the same quarter in 2006, amounting to US$25.1 million, boosted by a higher sales margin (on account of the successful commercial efforts), thus offsetting the slightly higher sales and administrative expenses.

Second quarter net income was US$16.3 million, which was a 298.3% increase on the same quarter of 2006.

The Company had a suitable operating performance, which was reflected by an operating working capital to sales ratio for the last trailing twelve month period ended on June 30 of 2007, of 31.6%, thus exhibiting an improvement when compared with the same period ended on June 30, 2006 when it was 37.5%.

In June 2007, Masisa signed a binding agreement in order to sell 90% of its shareholding in Forestal Argentina S.A. ("FASA"), 80% to Diversified International Timber Holdings LLC, and 10% to the Chilean company GrupoNueva S.A., the parent company of Masisa. The key pointsn of this agreement are: (i) the price agreed on for FASA was of US$107.2 million for its forestry assets, which leads to the recognition by Masisa, once the operation is closed, of a net profit of US$40.0 million; (ii) the new shareholders have committed themselves to managing FASA's forest assets pursuant to the Forest Stewardship Council (FSC). In addition, Masisa has retained the carbon credit rights equivalent to 55,000 tons of carbon dioxide; (iii) the aforementioned deal envisages a long-term contract for FASA to supply Masisa with wood at market prices (10 years evergreen); (iv) preferential option for Masisa to repurchase FASA. The final closing of this purchase and sale agreement is subject to: (i) due diligence; (ii) to the authorization from Argentina's National Border Zone Commission, and; (iii) normal commercial terms and conditions for these kinds of deals.

In June 2007, the Company successfully issued bonds amounting to UF2.5 million (equivalent to US$88.8 million). The F and G series bonds for UF0.5 million each have a 5-year term, and the H series bonds for UF1.5 million have a 21-year term. The spreads over the bonds of the Chilean Central Bank were 80bps for the F and G series and 114bps for the H Series. This transaction is part of the Company's plan to refinance its financial liabilities. The placement conditions obtained by Masisa largely reflect the market's good perception of the Company, its industry and its sound financial condition. -Masisa S.A.