Masisa - Sustainable Development - Message from the General Manager

Message from the General Manager

The merger between Terranova and Masisa was successfully
completed in May 2005. The new company thus formed is publishing
its first Sustainability Report, which is the principle means by which
it reports transparently on its achievements in the financial, social
and environmental areas.

The year 2005 was one of significant change that affected our
economic performance and that helped us achieve important
increases in profitability.

After the merger, I took up my post as new general manager in September and carried out a restructuring of the company, creating new business management units – forestry, solid wood and boards, and plan to create retail in 2006 – that will concentrate on value creation within the respective areas. A successful capital increase also took place at the end of the year, with new stock being placed in the United States, Europe and Latin America. In this manner we established a more diversified base of international stockholders and greater stockholder liquidity. Masisa’s financial liabilities were refinanced through the issuing of new bonds that allowed for an extension of the payment periods and a reduction in financial costs.

These achievements allow us to contemplate our future with optimism, as we have established the basis for considerable improvements in profitability.

I would like to draw attention to an issue with which we are not satisfied: safety. Over the last two years we have suffered the deaths of four contractors in Chile and Brazil. I commit us to do everything in our power to achieve our goal of zero accidents.

I would like to point out that one of our main achievements has been the initiation of processes of dialogue and consultation with our main stakeholders, especially with the communities around our plants. These are processes that provide us with valuable lessons and allow us to make better decisions in the company, as well as giving us a better understanding of how we can involve ourselves more productively in stimulating local development.

The effort to ensure that all our employees know of and apply our vision, values and business principles is also noteworthy, as well as advances in the use of the Sustainability Scorecard©, our management tool that integrates the financial, social, and environmental areas in the company’s day-to-day operations.

I am also proud to report that all our industrial plants operate with ISO 14001 and OHSAS 18001 certifications, while all our plantations have FSC certification, except for Argentina, which will be certified in 2006.

In Masisa we believe that we can, and indeed must, contribute to breaking the cycle of poverty. We are planning to replicate throughout Latin America the pilot projects that we have in Chile to provide basic furniture for low-cost housing among lower income segments of the population. We shall also continue training furniture making micro-entrepreneurs with the participation of the Placacentros, our specialized retail outlets.

We are aware that Masisa must make a considerable effort to bring its human resource management up to world-class standards. We will be paying special attention to this issue over the coming years.

This report has been verified by PricewaterhouseCoopers, and it benefited from the participation of the Universidad Austral de Chile, representing civil society.

Masisa is committed to the principles of the UN Global Compact. Our challenge is to communicate what we are doing more effectively both within the company and with civil society regarding the implementation of these principles. This report has thus been prepared to inform on our progress and actions in this area.

A summary of the forestry indicators suggested by WWF, the GRI guidelines and principles of the UN Global Compact are presented at the end of the document to facilitate the identification of relevantinformation. Our commitment to transparency can beappreciated in the comments we have requested and included in this report. We are satisfied that the constructive comments and ideas will contribute to improve our performance.

In Masisa we are continuously striving to be a companythat is successful in the financial, social and environmental areas. We aim to triumph in markets operating in a responsible and ethical manner, andwe are convinced that companies can and must play a leading role in building sustainable societies. In this context we are motivated by the fact that little by little markets are starting to prefer us because of the way we operate. In addition, financiers are beginning to get seriously interested in learning about our social and environmental management processes. We are also pleased that increasing numbers of people are seeking work with us.

The mutual effort of all our employees is taking usdown the right road. We still have a long journey ahead, but I am confident that we are moving in the right direction. The criticism, dialogue and continuous interaction with all our stakeholders will allow us to advance even further.