Cementos Pacasmayo S.A.A. Announces Consolidated Results for Fourth Quarter 2023

Rhea-AI Summary

Cementos Pacasmayo (CPAC) reported its fourth-quarter and full-year 2023 financial results, showing a 29.0% increase in Adjusted EBITDA, reaching S/156.1 million, with a 30.5% margin increase. Revenues decreased by 4.2%, while sales volume of cement, concrete, and precast decreased by 10.3%. The company's Consolidated EBITDA reached S/119.5 million, with a net income of S/35.9 million. Despite challenges, CPAC was included in the Sustainability Yearbook 2024 by S&P. For the full report, visit the company's website.

Positive

• Adjusted EBITDA increased by 29.0% to S/156.1 million in the fourth quarter of 2023.
• Adjusted EBITDA margin saw a 7.9 percentage point increase to 30.5% due to operational efficiencies and decreased raw material costs.
• Revenues decreased by 4.2% in the fourth quarter, mainly due to a contraction in demand affecting the self-construction segment and private sector.
• Consolidated EBITDA reached S/119.5 million, a decrease of 1.2%, primarily due to the impairment of vertical kilns in Pacasmayo.
• Net income decreased by 7.7% to S/35.9 million in the fourth quarter.
• CPAC was included in the Sustainability Yearbook 2024 by S&P, marking the fourth consecutive year of recognition.
• Adjusted EBITDA increased by 4.9% to S/518.3 million in 2023, mainly due to lower costs and operational efficiencies.
• Revenues decreased by 7.8% in 2023, primarily due to low levels of private and public investment affecting cement demand.
• Consolidated EBITDA reached S/481.8 million in 2023, a decrease of 2.4%, mainly due to the impairment of vertical kilns.
• Net income decreased by 4.5% to S/168.9 million in 2023.
• Net profit for 2023 would have been S/194.7 million, a 10.1% increase, if we exclude the non-cash effect, mainly due to operational efficiencies.

Negative

• None.

Insights

Financial Analyst

The financial results of Cementos Pacasmayo, a leading Peruvian cement company, indicate a mixed performance in the fourth quarter of 2023. A noteworthy element is the 29.0% increase in Adjusted EBITDA, which suggests significant operational efficiencies achieved through the implementation of a new kiln technology. This advancement not only enhances production capacity but also reduces emission levels, aligning with global environmental standards. The Adjusted EBITDA margin improvement by 7.9 percentage points is particularly impressive, reflecting a robust cost management strategy despite a decrease in revenues by 4.2%.

However, the contraction in demand impacting sales volume by 10.3% raises concerns about market dynamics and future revenue streams. The impairment of the vertical kilns, which resulted in a net income decrease of 7.7%, is a significant investment for the company's future sustainability but does carry short-term financial impacts. Investors should note the company's resilience in maintaining a stable net income margin, which increased slightly despite the overall net income drop. The mention of non-cash effects on net profit suggests that the company's underlying operational performance remains strong, which could be a positive signal for future profitability.

Market Research Analyst

The Peruvian construction industry, served by Cementos Pacasmayo, seems to be experiencing a downturn in demand, particularly in the self-construction segment and the private sector. This is evident from the reported decrease in revenues and sales volume. The company's strategic response, focusing on operational efficiencies and cost reductions, is essential in mitigating the negative effects of this contraction. Looking at the broader market, the impact of cyclone Yaku on the construction industry and the company's operations is a critical external factor that should be considered when evaluating the company's performance and future outlook.

Furthermore, the company's inclusion in the Sustainability Yearbook 2024 by S&P for the fourth consecutive year speaks to its commitment to environmental, social and governance (ESG) practices. Such recognition could potentially enhance the company's reputation and appeal to a growing segment of socially responsible investors. The importance of ESG factors is increasingly influencing investment decisions and Pacasmayo's performance in this area could have positive implications for its long-term valuation.

Environmental Analyst

The transition from traditional vertical kilns to a new, more efficient kiln technology by Cementos Pacasmayo is a significant development from an environmental perspective. The reduction in emissions and increased operational efficiency not only reduce the company's environmental footprint but also align with global trends towards sustainable production practices. Such advancements could potentially reduce regulatory risks and improve the company's competitive position in the market.

Moreover, the company's continuous recognition in the Sustainability Yearbook indicates a strategic prioritization of sustainability initiatives, which could lead to long-term cost savings through energy efficiency and waste reduction. This proactive approach to environmental management may also open up new opportunities for the company to participate in green projects and attract investment from funds focused on sustainability.

LIMA, Peru--(BUSINESS WIRE)-- Cementos Pacasmayo S.A.A. and subsidiaries (NYSE: CPAC; BVL: CPACASC1) (“the Company” or “Pacasmayo”) a leading cement company serving the Peruvian construction industry, announced today its consolidated results for the fourth quarter (“4Q23”) and for the year (“2023”) ended December 31, 2023. These results have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and are stated in Soles (S/).

4Q23 FINANCIAL AND OPERATIONAL HIGHLIGHTS:

(All comparisons are to 4Q22, unless otherwise stated)

• Adjusted EBITDA was S/156.1 million, a 29.0% increase, mainly due to operational efficiencies derived from our new kiln in Pacasmayo, as well as decreased costs of raw materials.
• Adjusted EBITDA margin of 30.5%, an increase of 7.9 percentage points, due to the above-mentioned operational efficiencies and decreased raw material costs.
• Revenues decreased 4.2%, mainly due to a contraction in demand, which affected the self-construction segment and the private sector. However, revenues were in line with those in 3Q23, which was the quarter with highest revenues this year, showing a sustained positive trend in demand.
• Sales volume of cement, concrete and precast decreased 10.3%, mainly due to the above-mentioned decrease in demand.
• Consolidated EBITDA reached S/119.5 million, a decrease of 1.2%, mainly due to the impairment of our vertical kilns in Pacasmayo, as the new kiln entered into operations, which is both more efficient and produces lower emissions, replacing older kilns.
• Net income of S/ 35.9 million, a 7.7% decrease mainly due to the impairment of our vertical kilns.
• The Sustainability Yearbook 2024 - We are honored to be included in the Yearbook by S&P, for the fourth consecutive year. This Yearbook incorporates companies that score in the top 15% of their industry globally and have a gap of less than 30% from the leader's Global ESG score.

2023 FINANCIAL AND OPERATIONAL HIGHLIGHTS:

(All comparisons are to 2022, unless otherwise stated)

• Adjusted EBITDA increased 4.9%, reaching S/518.3 million, mainly due to lower costs and operational efficiencies as we discontinued the use of imported clinker, started operating our new, more efficient kiln, and benefited from more favorable costs of raw materials.
• Adjusted EBITDA margin of 26.6%, a 3.2 percentage point increase, mainly due to improved cost structure as a result of both operational efficiencies and lower raw material costs.
• Revenues decreased 7.8%, mainly due to the low levels of private and public investment, which affected cement demand, as well as the impact of cyclone Yaku during the first months of the year.
• Sales volume of cement, concrete and precast decreased 13.9%, mainly due to the above-mentioned reasons.
• Consolidated EBITDA of S/ 481.8 million, a decrease of 2.4%, mainly due to the S/.36.6 million impairment of our vertical kilns.
• Net income of S/ 168.9 million, a 4.5% decrease, mainly due to the above-mentioned impairment. However, net income margin increased 0.3 percentage point, reaching 8.7% during this period. If we take away the non-cash effect, net profit for 2023 would have been S/ 194.7 million, a 10.1% increase when compared to the previous year, mainly due to the operational efficiencies mentioned above.

For a full version of Cementos Pacasmayo’s Fourth Quarter 2023 Earnings Release, please visit https://www.cementospacasmayo.com.pe/inversionistas/reportes

CONFERENCE CALL INFORMATION:

Cementos Pacasmayo will host a conference call on Thursday, February 15, 2024, to discuss these results at 11:00 a.m. Lima Time and Eastern Time.

To access the call, please dial:

+1 (718) 866-4614 from within the U.S.

Access code: 505256

There will also be a live Audio Webcast of the event at:

https://mm.closir.com/slides?id=505256

You can also find additional dial-in numbers depending on your current location in the above link.

About Cementos Pacasmayo S.A.A.

Cementos Pacasmayo S.A.A. is a cement company, located in the Northern region of Peru. In February 2012, the Company’s shares were listed on The New York Stock Exchange - Euronext under the ticker symbol "CPAC". With more than 65 years of operating history, the Company produces, distributes and sells cement and cement-related materials, such ready-mix concrete and precast materials. Pacasmayo’s products are primarily used in construction, which has been one of the fastest-growing segments of the Peruvian economy in recent years. The Company also produces and sells quicklime for use in mining operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214269472/en/

Cementos Pacasmayo S.A.A.

In Lima, Peru:

Manuel Ferreyros, CFO

Claudia Bustamante

Investor Relations Manager

+51-958699760

cbustamante@cpsaa.com.pe

Source: Cementos Pacasmayo S.A.A.

FAQ

What was the Adjusted EBITDA for Cementos Pacasmayo in the fourth quarter of 2023?

The Adjusted EBITDA for Cementos Pacasmayo in the fourth quarter of 2023 was S/156.1 million, showing a 29.0% increase.

Why did Revenues decrease in the fourth quarter of 2023 for CPAC?

Revenues decreased in the fourth quarter of 2023 for CPAC mainly due to a contraction in demand affecting the self-construction segment and private sector.

What was the Sales volume decrease for cement, concrete, and precast in the fourth quarter of 2023?

The sales volume of cement, concrete, and precast decreased by 10.3% in the fourth quarter of 2023.

What was the Net income for CPAC in the fourth quarter of 2023?

The Net income for CPAC in the fourth quarter of 2023 was S/35.9 million, showing a 7.7% decrease.

Why was CPAC included in the Sustainability Yearbook 2024 by S&P?

CPAC was included in the Sustainability Yearbook 2024 by S&P for scoring in the top 15% of their industry globally and having a gap of less than 30% from the leader's Global ESG score.

What was the Adjusted EBITDA for Cementos Pacasmayo in 2023?

The Adjusted EBITDA for Cementos Pacasmayo in 2023 was S/518.3 million, showing a 4.9% increase.

Why did Revenues decrease in 2023 for CPAC?

Revenues decreased in 2023 for CPAC mainly due to low levels of private and public investment affecting cement demand.

What was the Sales volume decrease for cement, concrete, and precast in 2023?

The sales volume of cement, concrete, and precast decreased by 13.9% in 2023.

What was the Net income for CPAC in 2023?

The Net income for CPAC in 2023 was S/168.9 million, showing a 4.5% decrease.

How much would the net profit for 2023 have been for CPAC if we exclude the non-cash effect?

The net profit for 2023 would have been S/194.7 million, a 10.1% increase, if we exclude the non-cash effect, mainly due to operational efficiencies.