Cementos Pacasmayo S.A.A. Announces Consolidated Results for Second Quarter 2024

Rhea-AI Summary

Cementos Pacasmayo S.A.A. (NYSE: CPAC) reported its Q2 2024 and 6M 2024 results. In Q2, revenues increased by 3.4% due to improved sales mix, while sales volume decreased by 5.8%. Consolidated EBITDA rose 6.1% to S/119.5 million, with a margin of 26.1%. Net income decreased by 15.4% to S/ 36.8 million. For 6M 2024, revenues grew 1.3%, despite a 6.5% decrease in sales volume. EBITDA increased 8.1% to S/252.3 million, with a margin of 27.0%. Net income remained stable at S/ 86.3 million. The company benefited from operational efficiencies and lower costs due to its new kiln in Pacasmayo.

Positive

• Revenue increased by 3.4% in Q2 2024 and 1.3% in 6M 2024
• Consolidated EBITDA grew 6.1% in Q2 2024 and 8.1% in 6M 2024
• EBITDA margin improved by 0.7 percentage points in Q2 and 1.7 percentage points in 6M 2024
• Operational efficiencies and lower costs achieved due to new kiln in Pacasmayo
• Increased sales of concrete and precast for Piura airport project

Negative

• Sales volume of cement, concrete, and precast decreased by 5.8% in Q2 and 6.5% in 6M 2024
• Net income decreased by 15.4% in Q2 2024
• Contraction in bagged cement demand
• Decreased cement demand from all segments in 6M 2024

Financial Analyst

The financial results reported by Cementos Pacasmayo S.A.A. offer mixed implications for investors. Revenue growth of 3.4% in 2Q24, driven by increased sales of concrete and precast, suggests positive demand trends in these segments, likely tied to projects like the Piura airport and public sector investments. However, the 5.8% decline in sales volume for cement, concrete and precast indicates underlying challenges, particularly in the bagged cement market.

On the operational front, the 6.1% increase in EBITDA and margin improvement to 26.1% reflect efficiency gains from the new kiln. These operational efficiencies are particularly important given the competitive nature of the cement industry. However, the significant 15.4% decrease in net income due to a one-off exchange rate gain in 2Q23 shows the impact of non-recurring items on profitability, which can be misleading without deeper analysis.

For the first six months, a 1.3% revenue increase and 8.1% EBITDA growth signal steady operational improvements but highlight ongoing demand pressures in cement. The stable net income year-over-year is a positive sign amidst these challenges, showing resilience in core profitability.

Overall, the company’s ability to maintain margins and improve operational efficiency amid sales volume declines is commendable, though the demand contraction warrants close monitoring.

Market Research Analyst

The results of Cementos Pacasmayo underline certain critical trends within the Peruvian construction sector. The uptick in revenue from concrete and precast sales linked to the Piura airport project and public sector recovery is a significant indicator of governmental investment impacting company performance. Such projects can have a prolonged positive influence on the company’s order book and cash flows.

However, the reported decline in cement demand, especially in the bagged segment, is concerning. This could indicate broader economic issues such as reduced private investment or sluggish construction sector growth. It will be important to monitor whether this trend persists and if the company can pivot towards other revenue-generating activities, such as more integrated service offerings or additional large-scale projects.

The operational efficiencies achieved through the new kiln, which clearly contribute to the enhanced EBITDA margin, suggest that Cementos Pacasmayo is strategically investing in technological advancements. These investments are likely aimed at sustaining long-term profitability despite market fluctuations.

From an investor’s perspective, the focus should be on how well Cementos Pacasmayo can leverage public infrastructure projects to offset weaker private demand and whether operational efficiencies can continue to support profitability.

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 second quarter (“2Q24”) and the first six months of the year (“6M24”). These results have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and are stated in Soles (S/).

2Q24 FINANCIAL AND OPERATIONAL HIGHLIGHTS:

(All comparisons are to 2Q23, unless otherwise stated)

• Revenues increased by 3.4%, mainly due to sales mix, as concrete and precast sales increased because of sales for the Piura airport project and the recovery of public sector investment.
• Sales volume of cement, concrete and precast decreased by 5.8%, mainly due to a contraction in bagged cement demand.
• Consolidated EBITDA increased 6.1%, reaching S/119.5 million, mainly due to the above-mentioned revenue increase, as well as lower costs and operational efficiencies derived from our new kiln in Pacasmayo.
• Consolidated EBITDA margin was 26.1%, a 0.7 percentage point increase.
• Net income was S/ 36.8 million, a 15.4% decrease, mainly due to a one-off exchange rate gain in 2Q23 because of the completion of the Pacasmayo plant improvement project.

6M24 FINANCIAL AND OPERATIONAL HIGHLIGHTS:

(All comparisons are to 6M23, unless otherwise stated)

• Revenues increased by 1.3%, mainly due to the increased sales of concrete and precast mentioned above.
• Sales volume of cement, concrete and precast decreased by 6.5%, mainly due to decreased cement demand from all segments.
• Consolidated EBITDA increased 8.1%, reaching S/252.3 million, mainly due to lower costs and operational efficiencies by using our new and more efficient kiln and discontinuing the use of imported clinker.
• Consolidated EBITDA margin was 27.0%, a 1.7 percentage point increase.
• Net income was S/ 86.3 million similar to the previous year.

For a full version of Cementos Pacasmayo’s Second Quarter 2024 Earnings Release, please visit https://www.cementospacasmayo.com.pe/inversionistas/reportes

CONFERENCE CALL INFORMATION:

Cementos Pacasmayo will host a conference call on Tuesday, July 23, 2024, to discuss these results at 9:30 a.m. Lima Time and 10:30 am 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/20240722150671/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 Cementos Pacasmayo's (CPAC) revenue growth in Q2 2024?

Cementos Pacasmayo's revenue increased by 3.4% in Q2 2024 compared to Q2 2023.

How did CPAC's EBITDA perform in Q2 2024?

Consolidated EBITDA increased by 6.1%, reaching S/119.5 million in Q2 2024.

What was the main reason for CPAC's net income decrease in Q2 2024?

Net income decreased by 15.4% mainly due to a one-off exchange rate gain in Q2 2023 related to the completion of the Pacasmayo plant improvement project.

How did CPAC's sales volume change in the first half of 2024?

Sales volume of cement, concrete, and precast decreased by 6.5% in the first six months of 2024 compared to the same period in 2023.

What factors contributed to CPAC's improved EBITDA margin in 6M 2024?

The improved EBITDA margin was mainly due to lower costs and operational efficiencies from using the new, more efficient kiln and discontinuing the use of imported clinker.