UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2023

 

Commission File Number 001-35401

 

CEMENTOS PACASMAYO S.A.A.
(Exact name of registrant as specified in its charter)

 

PACASMAYO CEMENT CORPORATION
(Translation of registrant’s name into English)

 

Republic of Peru
(Jurisdiction of incorporation or organization)

 

Calle La Colonia 150, Urbanización El Vivero
Surco, Lima
Peru
(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F  ☒          Form 40-F  ☐

 

 

 

 

 

CEMENTOS PACASMAYO S.A.A.

 

The following exhibit is attached:

 

EXHIBIT NO.   DESCRIPTION
99.1  

Consolidated Results for the Third Quarter

 

1

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CEMENTOS PACASMAYO S.A.A.  
   
By: /s/ CARLOS JOSE MOLINELLI MATEO  
Name:   Carlos Jose Molinelli Mateo  
Title: Stock Market Representative  
     
Date: October 24, 2023  

 

 

2

 

 

Exhibit 99.1

 

 

 

 

 

CEMENTOS PACASMAYO S.A.A. ANNOUNCES CONSOLIDATED RESULTS

FOR THIRD QUARTER 2023

 

Lima, Peru, October 25, 2023 – 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 third quarter (“3Q23”) and the nine months of the year (“9M23”). These results have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and are stated in Peruvian Soles (S/).

 

3Q23 FINANCIAL AND OPERATIONAL HIGHLIGHTS:

(All comparisons are to 3Q22, unless otherwise stated)

 

●Revenues decreased 6.7%, mainly due to a contraction in demand, which affected the self-construction segment, as well as a stagnation in public investment. However, compared to 2Q23, revenues increased 16.9%.

 

●Sales volume of cement, concrete and precast decreased 11.5%, mainly due to the above-mentioned reasons. However, when compared to 2Q23, sales volume increased 14.5%.

 

●Consolidated EBITDA of S/128.9 million, a 3.2% increase, mainly due to efficiencies derived from the use of our own clinker as well as lower costs of raw materials.

 

●Consolidated EBITDA margin of 24.9%, a 2.4 percentage point increase, mainly due to the above-mentioned decreased costs.

 

●Net income of S/ 46.0 million, a 4.1% increase mainly due to the above-mentioned reasons.

 

 

9M23 FINANCIAL AND OPERATIONAL HIGHLIGHTS:

(All comparisons are to 9M22, unless otherwise stated)

 

●Revenues decreased 9.1%, 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 15.2%, mainly due to the above-mentioned reasons.

 

●Consolidated EBITDA of S/ 362.2 million, a 2.9% decrease, mainly due to decreased revenues, partially offset by lower costs.

 

●Consolidated EBITDA margin of 25.2%, a 1.6 percentage point increase, mainly due to improved cost structure, as well as the halt in use of imported clinker and the use of lower cost raw materials.

 

●Net income of S/ 133.0 million, a 3.6% decrease, in line with lower revenues as mentioned above. However, net income margin increased 0.5 percentage point, reaching 9.2% during this period.

 

 

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   Financial and Operating Results 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Cement, concrete and precast shipments (MT)   781.5    882.7    -11.5%   2,202.8    2,597.8    -15.2%
In millions of S/                              
Sales of goods   516.7    553.6    -6.7%   1,438.7    1,581.9    -9.1%
Gross profit   174.6    165.9    5.2%   487.8    488.9    -0.2%
Operating profit   91.5    89.8    1.9%   256.9    269.2    -4.6%
Net income   46.0    44.2    4.1%   133.0    137.9    -3.6%
Consolidated EBITDA   128.9    124.9    3.2%   362.2    372.9    -2.9%
Gross Margin   33.8%   30.0%   3.8 pp.    33.9%   30.9%   3.0 pp. 
Operating Margin   17.7%   16.2%   1.5 pp.    17.9%   17.0%   0.8 pp. 
Net income Margin   8.9%   8.0%   0.9 pp.    9.2%   8.7%   0.5 pp. 
Consolidated EBITDA Margin   24.9%   22.6%   2.4 pp.    25.2%   23.6%   1.6 pp. 

 

 

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MANAGEMENT COMMENTS

 

During 3Q23 we were able to focus on maximizing profitability. Revenues showed a sequential improvement, increasing 16.9% during 3Q23 compared to the previous quarter. Although year-over-year revenues did decrease, consolidated EBITDA reached S/ 128.9 million, an increase of 3.2% when compared to the third quarter of 2022, and EBITDA margin also increased 2.4 percentage points, reaching 24.9%. This is the outcome of our focus on cost optimization, which has allowed us to maximize profitability as the demand environment begins to improve.

 

Moving on to our strategy, we would first like to mention that for the first time we have entered the top 10 in the Merco Empresas y Líderes 2023 ranking. We also continue to lead the cement sector for the eighth consecutive year. Merco, is the most prestigious corporate reputation ranking for Spanish-speaking Latin America. Present in more than 16 countries it evaluates the policies and initiatives of companies through a survey of opinion leaders, journalists, and executives, highlighting the perception of reputation in different organizations. This recognition is especially significant considering that Pacasmayo is a Company that operates only in a region of Peru, unlike the other members of the top 10, which operate nationwide or even at the multinational level. Moreover, this important recognition is the reflection of the work we have been doing for the past 65 years, measuring ourselves to the highest quality and efficiency standards, hand in hand with great human talent. We take this recognition with great honor and responsibility and are committed to establishing ourselves as agents of change in our communities, achieving transformational change in the lives of people and our planet.

 

We are also very proud to announce that we are the first and only cement company in Peru to certify all of its products under the rigorous scheme 5 of ICONTEC. We obtained this certification for our entire cement portfolio, complying with the most rigorous level for products established by the Supreme Decree that regulates the commercialization of cement in Peru. This certification was obtained from ICONTEC, an international certification body for products, services and management systems. Product certification is carried out based on the requirements of the Cement Technical Regulations, which establish the characteristics that cement must meet at the production and marketing level. Likewise, it requires that all cement producing and importing companies in Peru comply with the requirements indicated in said document in order to be able to market their products. The certification process consisted of a rigorous audit of the quality management system at the production, manufacturing and marketing level in our three plants and at authorized points of sale. Our corporate culture always motivates us to exceed the quality standards of our products with focus on sustainability and scheme 5 of this certification is clear proof of this, as we are going above and beyond the legal requirements and using it as a tool for continuous improvement for the benefit of our clients and the sector as a whole.

 

Finally, we are extremely grateful and honored to let you know that our CEO has been elected as a Board member of the GCCA for the upcoming two-year period. The Global Cement and Concrete Association (GCCA) is the association of cement and concrete producers from around the world. Its members represent 80% of the global cement industry volume outside China and come from virtually every country in the world. In 2020, GCCA member companies came together to commit to producing carbon-neutral concrete by 2050, in line with global climate goals. This appointment is not only a recognition of our commitment and dedication, but it also makes us proud to represent our country as the only Peruvian company in said Board. Moreover, our participation represents a significant step towards our ongoing commitment to reducing the impacts of our industry and promoting sustainable, resilient construction, but always keeping in mind the crucial need for economic development that our region still so desperately needs.

 

To sum up, this quarter we were able to deliver increased profitability, in a slightly improving demand environment, but mostly because of our optimal cost structure, including the coming in line of our Pacasmayo plant optimization. Likewise, by continuously delivering on our strategy, we have successfully built a strong corporate reputation that will allow us to continue working towards finding the best path for our company in our efforts to play a crucial role in the economic development of our country, through proper housing and infrastructure that is both sustainable and climate resilient.

 

 

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ECONOMIC OVERVIEW 3Q23:

 

During the third quarter of the year, the conditions of low economic growth and weak investment continued. Consequently, the Peruvian Central Bank has revised downward the GDP growth projection from 2.2% to 0.9% for 2023. Economic activity is expected to recover in 2024 and grow 3.0%, considering a moderate El Niño Phenomenon in the first quarter of 2024.

 

In recent weeks, the probability of a moderate to strong El Niño Phenomenon has increased. Although El Niño Phenomenon has an effect across all sectors, those most affected are fishing, construction, and agriculture. Likewise, although there is an impact at the national level, the Northern region is usually the most affected by heavy rains, in particular Tumbes, Piura, Lambayeque, and La Libertad. The current State budget of S/3.5 billion focuses mainly on emergency prevention, that is, cleaning rivers and streams and preventing landslides. Although there has been progress in prevention works, it is unlikely that the major works will be ready in time. The investment in large prevention projects amounts to S/ 6,200 million and only 45% has been put out to tender since they began to be awarded after almost 3 years of the approval of the budget for reconstruction with changes.

 

 

Despite the delays in prevention and reconstruction works after the 2017 coastal El Niño, a slight improvement is evident in the quality of bridges and roads in the Northern zone, which should be better prepared to face the next climatic phenomenon.

 

 

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PERUVIAN CEMENT INDUSTRY OVERVIEW:

 

The demand for cement in Peru is covered mainly by Pacasmayo, UNACEM and Cementos Yura, and to a lesser extent by Caliza Inca, imports and other small producers. Pacasmayo mainly covers the demand in the northern region of the country, while UNACEM covers the central region and Cementos Yura the southern region.

 

The northern region of Peru, according to the Instituto Nacional de Estadística e Informática (INEI) and Apoyo Consultoría, represents approximately 32.5% of the country’s population and 16.0% of national Gross Domestic Product (“GDP”). Despite the country’s sustained growth over the last 10 years, Peru continues to have a significant housing deficit, estimated at 1.9 million households throughout the country as per the Ministry of Housing, Construction and Sanitation.

 

In Peru, the majority of cement is sold to a highly fragmented consumer base of individuals that tend to gradually buy bags of cement to build or to improve their homes, a segment the industry refers to as “self-construction”.

 

Northern Region (thousands of metric tons)

 

Plant  2019   2020   2021   2022  

As of
Aug-23

   % part 
Pacasmayo Group   2,615    2,576    3,625    3,437    3,080    23.2%
Imports   13    38    62    2    -    0.0%
Total   2,628    2,614    3,687    3,439    3,080    23.2%

 

Central Region (thousands of metric tons)

 

Plant  2019   2020   2021   2022  

As of
Aug-23

   % part 
UNACEM   5,316    4,172    5,838    6,297    5,900    44.4%
Caliza Inca   513    382    518    515    511    3.8%
Imports   663    493    630    202    156    1.2%
Total   6,492    5,047    6,986    7,014    6,567    49.5%

 

Southern Region (thousands of metric tons)

 

Plant  2019   2020   2021   2022   As of
Aug-23		   % part 
Grupo Yura   2,584    2,019    2,895    3,047    2,732    20.6%
Imports   98    189    181    67    57    0.4%
Total   2,682    2,208    3,076    3,114    2,789    21.0%
                               
Others   769    732    877    840    840    6.1%
                               
Total, All Regions   12,571    10,601    14,626    14,407    13,276    100.0%

 

 

*Import figures are sourced from Aduanet. They represent quantities of imported cement, not shipped cement.

Source: INEI, Aduanet

 

6

 

 

OUR STRATEGIC PROGRESS

 

 

 

 

7

 

 

OPERATING RESULTS:

 

Production:

 

Cement Production Volume

(thousands of metric tons)

 

   Production 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Pacasmayo Plant   472.2    459.6    2.7%   1,177.9    1,335.8    -11.8%
Rioja Plant   76.9    76.8    0.1%   211.6    228.4    -7.4%
Piura Plant   223.5    344.3    -35.1%   792.4    1,013.3    -21.8%
Total   772.6    880.7    -12.3%   2,181.9    2,577.5    -15.3%

 

Cement production volume at the Pacasmayo plant increased 2.7% in 3Q23 compared to 3Q22, mainly due to the start of production of the new kiln. During 9M23, production decreased 11.8% compared to 9M22, as severe rainfall significantly reduced consumption during March and April.

 

In 3Q23, cement production volume at the Rioja plant remained in line with 3Q22. During 9M23, cement production decreased 7.4% compared to 9M22, mainly due to a moderation in demand.

 

Cement production volume at the Piura Plant decreased 35.1% in 3Q23 and 21.8% in 9M23 compared to 3Q22 and 9M22 respectively, mainly due to the moderation in demand mentioned above, as well as a shift in production to the Pacasmayo plant.

 

Total cement production volume decreased 12.3% in 3Q23 compared to 3Q22 and 15.3% in 9M23 compared to 9M22, in line with the decreased demand for cement.

 

Clinker Production Volume

(thousands of metric tons)

 

   Production 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Pacasmayo Plant   328.6    204.0    61.1%   763.9    674.4    13.3%
Rioja Plant   50.2    60.4    -16.9%   162.2    183.0    -11.4%
Piura Plant   -    206.0    -100.0%   527.5    747.5    -29.4%
Total   378.8    470.4    -19.5%   1,453.6    1,604.9    -9.4%

 

Clinker production volume at the Pacasmayo plant during 3Q23 increased 61.1%, mainly due to the start of our new kiln.

 

Clinker production volume at the Rioja plant decreased 16.9% in 3Q23 compared to 3Q22 and 11.4% in 9M23 compared to 9M22, in line with decreased cement demand, as well as inventory consumption during this quarter.

 

The Piura plant did not produce clinker this quarter, mainly due to the start of production of our new kiln in Pacasmayo, which resulted in a transfer of production to this plant, as well as to our annual production plan that aims to maximize the operational efficiency of our kilns. During 9M23, clinker production decreased 29.4%, due to the above-mentioned reasons.

 

 

8

 

 

Total clinker production volume decreased 19.5% in 3Q23 and 9.4% in 9M23, compared to 3Q22 and 9M22 respectively, mainly due to the moderation in cement demand.

 

Quicklime Production Volume

(thousands of metric tons)

 

   Production 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Pacasmayo Plant   4.7    9.1    -48.0%   23.1    33.8    -31.8%

 

Quicklime production volume in 3Q23 decreased 48.0% when compared to 3Q22 and decreased 31.8% in 9M23 when compared to 9M22, mainly due to our annual production program in order to maximize productivity, as well as lower sales volume.

 

INSTALLED CAPACITY:

 

Installed Clinker and Cement Capacity

 

Full year installed cement capacity at the Pacasmayo, Piura and Rioja plants remained stable at 2.9 million MT, 1.6 million MT and 440,000 MT, respectively.

 

Full year installed clinker capacity at the Piura and Rioja plants remained stable 1.0 million MT and 280,000 MT, respectively. Clinker capacity at the Pacasmayo plant increased from 1.5 million MT to 2.1 million MT.

 

Full year installed quicklime capacity at the Pacasmayo plant remained stable at 240,000 MT.

 

UTILIZATION RATE1:

 

Pacasmayo Plant Utilization Rate

 

   Utilization Rate 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Cement   65.1%   63.4%   1.7 pp.    54.2%   61.4%   -7.3 pp. 
Clinker   62.6%   54.4%   8.2 pp.    60.3%   59.9%   0.4 pp. 
Quicklime   7.9%   15.2%   -7.4 pp.    12.8%   18.8%   -6.0 pp. 

 

Cement production utilization rate at the Pacasmayo plant increased 1.7 percentage points in 3Q23 compared to 3Q22, mainly due to a shift in production from the Piura plant. For the 9M23, cement production utilization rate decreased 7.4 percentage points mainly due to the decreased cement demand mentioned above.

 

Clinker production utilization rate in 3Q23 increased 8.2 percentage points compared to 3Q22, mainly due to the start of production of the new kiln this quarter. During 9M23, the clinker production utilization rate was flat compared to 9M22.

 

 

1The utilization rates are calculated by dividing production in a given period over installed capacity. The utilization rate implies annualized production, which is calculated by multiplying real production for each quarter by four.

 

 

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Quicklime production utilization rate in 3Q23 decreased 7.4 percentage points and decreased 6.0 percentage points in 9M23 when compared to 3Q22 and 9M22 respectively, mainly due to the decreased sales volume mentioned above.

 

Rioja Plant Utilization Rate

 

   Utilization Rate 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Cement   69.9%   69.8%   0.1 pp.    64.1%   69.2%   -5.1 pp. 
Clinker   71.7%   86.3%   -14.5 pp.    77.2%   87.1%   -9.9 pp. 

 

The cement production utilization rate at the Rioja plant was 69.9% in 3Q23, in line with 3Q22. During 9M23, it was 64.1%; 5.1 percentage points lower than 9M22, in line with decreased cement demand.

 

The clinker production utilization rate at the Rioja plant was 71.7% in 3Q23 and 77.2% in 9M23; 14.5 and 9.9 percentage points lower than 3Q22 and 9M22 respectively, mainly due to decreased cement demand and consumption of our clinker inventory during this quarter.

 

Piura Plant Utilization Rate

 

   Utilization Rate 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Cement   55.9%   86.1%   -30.2 pp.    66.0%   84.4%   -18.4 pp. 
Clinker   -    82.4%   -82.4 pp.    70.3%   99.7%   -29.3 pp. 

 

The cement production utilization rate at the Piura plant was 55.9% in 3Q23 and 66.0% in 9M23, a 30.2 and 18.4 percentage point decrease when compared to 3Q22 and 9M22 respectively, mainly due to the shift in production to the Pacasmayo plant, as well as to the temporary slowdown in demand.

 

The clinker production utilization rate at the Piura plant was 0.0% in 3Q23 and 70.3% in 9M23, a 82.4 and 29.3 percentage point decrease when we compare to 3Q22 and 9M22, mainly due to the annual production plan to optimize our costs.

 

 

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Consolidated Utilization Rate

 

   Utilization Rate 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Cement   62.6%   71.3%   -8.8 pp.    58.9%   69.6%   -10.7 pp. 
Clinker   44.6%   67.7%   -23.1 pp.    60.9%   77.0%   -16.0 pp. 

 

The consolidated cement production utilization rate was 62.6% in 3Q23 and 58.9% in 9M23, 8.8 and 10.7 percentage points lower than 3Q22 and 9M22 respectively, in line with the slowdown in demand.

 

The consolidated clinker production utilization rate was 44.6% in 3Q23 compared to 3Q22 and 60.9% in 9M23, 23.1 and 16.0 percentage points lower than in 3Q22 and 9M22 respectively, mainly due to the increased use of the new kiln at the Pacasmayo plant, in order to maximize the operating efficiency of all our kilns.

 

FINANCIAL RESULTS:

 

Income Statement:

The following table shows a summary of the Consolidated Financial Results:

 

Consolidated Financial Results

(in millions of Soles S/)

 

   Income Statement 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Sales of goods   516.7    553.6    -6.7%   1,438.7    1,581.9    -9.1%
Gross Profit   174.6    165.9    5.2%   487.8    488.9    -0.2%
Total operating expenses, net   -83.1    -76.1    9.2%   -230.9    -219.7    5.1%
Operating Profit   91.5    89.8    1.9%   256.9    269.2    -4.6%
Total other expenses, net   -24.5    -25.9    -5.4%   -66.8    -70.6    -5.4%
Profit before income tax   67.0    63.9    4.9%   190.1    198.6    -4.3%
Income tax expense   -21.0    -19.7    6.6%   -57.1    -60.7    -5.9%
Profit for the period   46.0    44.2    4.1%   133.0    137.9    -3.6%

 

During 3Q23, revenues decreased 6.7% and 9.1% in 9M23, compared to 3Q22 and 9M22 respectively, mainly due to decreased sales volumes. However, gross profit increased 5.2% in 3Q23, mainly due to decreased costs, as we maximized the use of our own clinker and benefitted from lower costs of raw materials. During 9M23, gross profit remained in line with the same period of the previous year. Profit for the period increased 4.1% in 3Q23 as compared to 3Q22, mainly due to the efficiencies mentioned above. During 9M23, profit for the period decreased 3.6% when compared to 9M22, primarily due to decreased sales, partially offset by cost optimizations.

 

 

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SALES OF GOODS

 

The following table shows the Sales of Goods and their respective margins by business segment:

 

Sales: cement, concrete and precast

(in millions of Soles S/)

 

   Cement, concrete and precasts 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Sales of goods   497.0    516.2    -3.7%   1,364.8    1,463.2    -6.7%
Cost of Sales   -322.4    -352.1    -8.4%   -878.4    -977.6    -10.1%
Gross Profit   174.6    164.1    6.4%   486.4    485.6    0.2%
Gross Margin   35.1%   31.8%   3.3 pp.    35.6%   33.2%   2.5 pp. 

 

Sales of cement, concrete and precast decreased 3.7% in 3Q23 and 6.7% in 9M23, when compared to 3Q22 and 9M22 respectively, mainly due to decreased volume of bagged cement and precast, mainly due to the decrease in self-construction, public and private works. Gross margin increased 3.3 percentage points during 3Q23 and 2.5 percentage points during 9M23, when compared to 3Q22 and 9M22 respectively, mainly due to the decreased use of imported clinker, as well as decreased costs of raw materials, mainly coal.

 

Sales: cement

(in millions of Soles S/)

 

Sales of cement represented 88.3% of cement, concrete, and precast sales during 3Q23.

 

   Cement 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Sales of goods   438.9    458.2    -4.2%   1,228.2    1,296.0    -5.2%
Cost of Sales   -267.4    -299.8    -10.8%   -746.7    -822.8    -9.2%
Gross Profit   171.5    158.4    8.3%   481.5    473.2    1.8%
Gross Margin   39.1%   34.6%   4.5 pp.    39.2%   36.5%   2.7 pp. 

 

Sales of cement decreased 4.2% in 3Q23 compared to 3Q22 and 5.2% in 9M23 compared to 9M22, mainly due to decreased demand from the self-construction segment, from the record levels reached in the post-pandemic times. However, gross margin increased 4.5 percentage points during 3Q23 and 2.7 percentage points during 9M23, when compared to 3Q22 and 9M22 respectively, mainly due to cost optimization, as we have now discontinued the use of imported clinker, as well as lower costs of raw materials such as coal and higher average prices.

 

 

12

 

 

Sales: concrete, pavement, and mortar

(in millions of Soles S/)

 

Sales of concrete, pavement and mortar represented 10.4% of cement, concrete, and precast sales during 3Q23.

 

   Concrete, pavement, and mortar 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Sales of goods   51.5    49.8    3.4%   120.8    144.1    -16.2%
Cost of Sales   -47.6    -43.4    9.7%   -113.8    -128.4    -11.4%
Gross Profit   3.9    6.4    -39.1%   7.0    15.7    -55.4%
Gross Margin   7.6%   12.9%   -5.3 pp.    5.8%   10.9%   -5.1 pp. 

 

Sales of concrete, pavement and mortar increased 3.4% during 3Q23, when compared to 3Q22, mainly due to increased sales of pavement as we began dispatches for the Piura airport. During 9M23, sales of concrete, pavement and mortar decreased 16.2% when compared to 9M22, mainly due to decreased public and private investment, partially offset by the works executed this quarter. Gross margin decreased 5.3 percentage points in 3Q23 compared to 3Q22 and 5.1 percentage points in 9M23 compared to 9M22, mainly due to lower dilution of fixed costs.

 

Sales: precast

(in millions of Soles S/)

 

Sales of precast represented 1.3% of cement, concrete, and precast sales during 3Q23.

 

   Precast 
   3Q23   3Q22   % Var.   9M23   9M22   % Var. 
Sales of goods   6.7    8.2    -18.3%   15.8    23.2    -31.9%
Cost of Sales   -7.5    -8.9    -15.7%   -18.0    -26.5    -32.1%
Gross Profit   -0.8    -0.7    14.3%   -2.2    -3.3    -33.3%
Gross Margin   -11.9%   -8.5%   -3.4 pp.    -13.9%   -14.2%   0.3 pp. 

 

During 3Q23, precast sales decreased 18.3% compared to 3Q22 and 31.9% in 9M23 compared to 9M22, mainly due to decreased public and private investment. Gross margin was negative during this quarter, mainly due to market contraction and the consequent lower dilution of fixed costs.

 

 

13

 

 

Sales: Quicklime

(in millions of Soles S/)

 

   Quicklime 
   3Q23   3Q22%   Var.   9M23   9M22%   Var. 
Sales of goods   3.3    9.7    -66.0%   19.6    31.5    -37.8%
Cost of Sales   -3.5    -8.5    -58.8%   -18.0    -30.8    -41.6%
Gross Profit   -0.2    1.2    N/R    1.6    0.7    N/R 
Gross Margin   -6.1%   12.4%   -18.4 pp.    8.2%   2.2%   5.9 pp. 

 

During 3Q23, quicklime sales decreased 66.0%, when compared to 3Q22 and 37.8% in 9M23 when compared to the same period of the previous year, mainly due to decreased sales volume. In addition, gross margin decreased 18.4 percentage points in 3Q23 compared to 3Q22, mainly due to lower dilution of fixed costs. However, during 9M23, gross margin increased 5.9 percentage points when compared to 9M22, mainly due to our focus on higher margin products, as well as the moderation in coal prices.

 

Sales: Construction Supplies2

(in millions of Soles S/)

 

   Construction Supplies 
   3Q23   3Q22%   Var.   9M23   9M22%   Var. 
Sales of goods   16.4    27.7    -40.8%   54.3    87.1    -37.7%
Cost of Sales   -16.1    -26.9    -40.1%   -54.0    -83.9    -35.6%
Gross Profit   0.3    0.8    -62.5%   0.3    3.2    -90.6%
Gross Margin   1.8%   2.9%   -1.1 pp.    0.6%   3.7%   -3.1 pp. 

 

During 3Q23, construction supply sales decreased 40.8% compared to 3Q22 and 37.7% in 9M23 compared to 9M22, mainly due to decreased sales of steel bars. Gross margin decreased 1.1 percentage points in 3Q23 and 3.1 percentage points in 9M23, compared to 3Q22 and 9M22 respectively, mainly due to higher costs.

 

 

2Construction supplies include the following products: steel rebar, wires, nails, corrugated iron, electric conductors, plastic tubes and accessories, among others.

 

 

14

 

 

OPERATING EXPENSES:

 

Administrative Expenses

(in millions of Soles S/)

 

   Administrative Expenses 
   3Q23   3Q22%   Var.   9M23   9M22%   Var. 
Personnel expenses   28.8    30.5    -5.6%   89.7    86    4.3%
Third-party services   16.2    17.3    -6.4%   48.7    50.3    -3.2%
Board of Directors   1.7    1.7    0.0%   4.6    4.8    -4.2%
Depreciation and amortization   3.6    4.2    -14.3%   10.9    12.2    -10.7%
Other   4.9    4.4    11.4%   17.3    13.1    32.1%
Total   55.2    58.1    -5.0%   171.2    166.4    2.9%

 

 

Administrative expenses decreased 5.0% in 3Q23 compared to 3Q22, mainly due a temporary decrease in personnel expenses, as well as lower third-party services. During 9M23, administrative expenses increased 2.9% compared to 9M22, mainly due to an increase in salaries, in line with inflation as well as in licenses.

 

Selling Expenses

(in millions of Soles S/)

 

   Selling and distribution expenses 
   3Q23   3Q22%   Var.   9M23   9M22%   Var. 
Personnel expenses   11.3    11.6    -2.6%   31.0    32.8    -5.5%
Advertising and promotion   2.0    2.0    -    6.1    6.2    -1.6%
Third party services   2.0    1.9    5.3%   5.7    5.6    1.8%
Other   2.4    1.7    41.2%   8.1    6.5    24.6%
Total   17.7    17.2    2.9%   50.9    51.1    -0.4%

 

Selling expenses increased 2.9% in 3Q23 compared to 3Q22 mainly due increased web maintenance services. During 9M23, selling expenses remained in line with 9M22.

 

 

15

 

 

EBITDA RECONCILIATION:

 

Consolidated EBITDA

(in millions of Soles S/)

 

   Consolidated EBITDA 
   3Q23   3Q22%   Var.   9M23   9M22%   Var. 
Net Income   46.0    44.2    4.1%   133.0    137.9    -3.6%
+ Income tax expense   21.0    19.7    6.6%   57.1    60.7    -5.9%
- Finance income   -2.1    -0.9    N/R    -4.3    -2.4    79.2%
+ Finance costs   26.9    25.0    7.6%   76.8    71.6    7.3%
+/- Net loss on the valuation of trading derivative financial instruments   0.0    -0.1    -100.0%   0.0    0.0    0.0 
+/- Net loss from exchange rate   -0.4    1.9    N/R    -5.7    1.5    N/R 
+ Depreciation and amortization   37.5    35.1    6.8%   105.3    103.6    1.6%
Consolidated EBITDA   128.9    124.9    3.2%   362.2    372.9    -2.9%

 

Consolidated EBITDA increased 3.2% in 3Q23 mainly due to a better cost structure, derived from lower coal costs and the reduction of imported clinker as our new kiln in Pacasmayo is now fully operational. During 9M23, EBITDA decreased 2.9% when compared to 9M22, mainly due to the decrease in demand.

 

 

16

 

 

Cash and Debt Position:

Consolidated Cash (in millions of Soles S/)

 

As of September 30, 2023, the cash balance was S/ 177.1 million (US $46.7 million). This balance includes certificates of deposit in the amount of S/ 106 million (US $27.9 million) and US $1.5 million, distributed as follows:

 

Certificates of deposits in Soles

 

Bank  Amount (S/)  Interest
Rate		   Initial Date  Maturity Date
Banco de Crédito del Perú  S/ 14.0   7.13%  September 29, 2023  October 5, 2023
Banco de Crédito del Perú  S/ 8.5   7.88%  August 31, 2023  November 29, 2023
Banco de Crédito del Perú  S/ 8.5   7.78%  September 8, 2023  November 29, 2023
Banco de Crédito del Perú  S/ 8.5   7.13%  September 29, 2023  October 4, 2023
Scotiabank Perú  S/ 8.5   7.80%  September 14, 2023  December 1, 2023
Scotiabank Perú  S/ 8.5   7.50%  September 21, 2023  December 1, 2023
Scotiabank Perú  S/ 8.5   7.15%  September 28, 2023  December 1, 2023
Banco de Crédito del Perú  S/ 7.0   7.20%  September 29, 2023  October 12, 2023
Banco de Crédito del Perú  S/ 6.0   7.20%  September 29, 2023  October 12, 2023
Banco de Crédito del Perú  S/ 5.0   7.13%  September 29, 2023  October 3, 2023
Banco de Crédito del Perú  S/ 5.0   7.13%  September 29, 2023  October 5, 2023
Banco de Crédito del Perú  S/ 4.5   7.13%  September 29, 2023  October 5, 2023
Banco de Crédito del Perú  S/ 4.0   7.16%  September 22, 2023  October 5, 2023
Banco de Crédito del Perú  S/ 2.0   7.13%  September 29, 2023  October 3, 2023
Banco de Crédito del Perú  S/ 1.5   7.13%  September 29, 2023  October 5, 2023
               
   S/ 100.0           

 

Certificates of deposits in American Dollars      

 

Bank  Amount
(USD)		  Interest
Rate		   Initial Date  Maturity Date
Banco de Crédito del Perú  USD 1.5   4.70%  September 29, 2023  October 5, 2023
               
   USD 1.5           

 

The remaining balance of S/ 71.1 million (US$ 18.8 million) is held mainly in the Company’s bank accounts, of which US$ 12.8 million are denominated in US dollars and the balance in Soles.

 

 

17

 

 

DEBT POSITION:

 

Consolidated Debt

(in millions of Soles S/)

 

Certificates of deposits in Soles

 

Below are the contractual obligations with payment deadlines related to the Company’s debt, including interest.

 

   Payments due by period 
   Less than
1 year		   1-3
Years		   3-5
Years		   More than
5 Years		   Total 
Indebtedness   346.4    312.7    312.7    609.1    1,580.9 
Future interest payments   88.0    137.8    102.5    78.2    406.5 
Total   434.4    450.5    415.2    687.3    1,987.4 

 

As of September 30, 2023, the Company’s total outstanding debt, as shown in the financial statements, amounted to S/ 1,573.8 million (US$ 414.5 million). This debt is mainly composed of the two local bonds issued in January 2019 and the club deal obtained last year.

 

As of September 30, 2023, Debt/EBITDA ratio was 3.3 times.

 

Capex

(in millions of Soles S/)

 

As of September 30, 2023, the Company invested S/ 258.4 million (US$ 68.1 million), allocated to the following projects:

 

Projects  9M23 
Pacasmayo Plant Projects   230.2 
Concrete and aggregates equipment   11.4 
Rioja Plant Projects   6.2 
Piura Plant Projects   8.2 
Others   2.4 
Total   258.4 

 

 

18

 

 

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.

 

For more information, please visit: http://www.cementospacasmayo.com.pe/

 

Note: The Company presented some figures converted from Soles to U.S. Dollars for comparison purposes. The exchange rate used to convert Soles to U.S. dollars was S/ 3.797 per US$ 1.00, which was the average exchange rate, reported as of September 30, 2023, by the Superintendencia de Banca, Seguros y AFP’s (SBS). The information presented in U.S. dollars is for the convenience of the reader only. Certain figures included in this report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures presented in previous quarters.

 

 

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management’s current view and estimates of future economic circumstances, industry conditions, Company performance and financial results. Also, certain reclassifications have been made to make figures comparable for the periods. The words “anticipates”, “believes”, “estimates”, “expects”, “plans” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

 

 

 

19

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of September 30, 2023 (unaudited) and December 31,2022 (audited)

 

   As of Sep-23   As of Dec-22 
   S/ (000)   S/ (000) 
Cash and cash equivalents   177,124    81,773 
Term deposits with maturity greater than ninety days   8,500    - 
Other financial instruments   -    86,893 
Trade and other receivables,net   96,078    101,491 
Income tax prepayments   4,369    8,268 
Inventories   817,685    884,969 
Prepayments   21,595    25,059 
Total current assets   1,125,351    1,188,453 
Trade and other receivables, net   43,928    43,543 
Financial instruments designated at fair value through OCI   274    274 
Property, plant and equipment, net   2,151,371    2,007,838 
Intangible assets, net   60,882    56,861 
Goodwill   4,459    4,459 
Deferred income tax assets   11,220    9,005 
Right-of-use assets   6,470    3,639 
Other assets   78    89 
Total non-current assets   2,278,682    2,125,708 
Total assets   3,404,033    3,314,161 
Trade and other payables   277,535    284,554 
Financial obligations   345,146    618,907 
Lease liabilities   3,184    2,005 
Income tax payable   9,159    16,340 
Provisions   56,120    31,333 
Total current liabilities   691,144    953,139 
Financial obligations   1,228,637    974,264 
Lease liabilities   3,804    2,350 
Provisions   20,675    47,638 
Deferred income tax liabilities   130,082    141,635 
Total non-current liabilities   1,383,198    1,165,887 
Total liabilities   2,074,342    2,119,026 
Capital stock   423,868    423,868 
Investment shares   40,279    40,279 
Investment shares holds in Treasury shares   (121,258)   (121,258)
Additional paid-in capital   432,779    432,779 
Legal reserve   168,636    168,636 
Other accumulated comprehensive results (loss)   (16,272)   (17,787)
Retained earnings   401,659    268,618 
Total Equity   1,329,691    1,195,135 
Total liability and equity   3,404,033    3,314,161 

 

 

20

 

 

INTERIM CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF PROFIT AND LOSS

For the three and nine-month periods ended September 30, 2023, and 2022 (both unaudited)

 

   3Q23   3Q22   9M23   9M22 
   S/ (000)   S/ (000)   S/ (000)   S/ (000) 
Sales of goods   516,664    553,556    1,438,698    1,581,851 
Cost of sales   (342,025)   (387,695)   (950,886)   (1,092,943)
Gross profit   174,639    165,861    487,812    488,908 
Operating income (expenses)                    
Administrative expenses   (55,099)   (58,149)   (171,155)   (166,399)
Selling and distribution expenses   (17,689)   (17,242)   (50,897)   (51,237)
Other operating (expenses) income, net   (10,290)   (688)   (8,814)   (2,023)
Total operating expenses , net   (83,078)   (76,079)   (230,866)   (219,659)
                     
Operating profit   91,561    89,782    256,946    269,249 
Other income (expenses)                    
Finance income   2,063    855    4,254    2,425 
Financial costs   (26,907)   (24,999)   (76,784)   (71,607)
Accumulated net loss due on settlement of derivative financial instruments   -    62    19    (2)
Loss from exchange difference, net   376    (1,832)   5,717    (1,481)
                     
Total other expenses, net   (24,468)   (25,914)   (66,794)   (70,665)
                     
Profit before income tax   67,093    63,868    190,152    198,584 
Income tax expense   (20,978)   (19,667)   (57,111)   (60,679)
                     
Profit for the period   46,115    44,201    133,041    137,905 
                     
Earnings per share                    
Basic and diluted earnings per year attributable to equity holders of common shares and investment in shares of Cementos Pacasmayo S.A.A. (S/ per share)   0.10    0.10    0.20    0.32 

 

 

21

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the nine-month periods ended September 30, 2023, 2022 (unaudited)

 

    Attributable to equity holders of the parent  
    Capital     Investment
Shares		     Investments
Shares hold
in Treasury 		    Additional
paid-in
capital 		    Legal
reserve 		    Unrealized
gain(loss)
in financial
instruments
designated at
fair value 		    Unrealized
gain(loss) on
cash flow
hedge 		    Retained
earnings 		 
    S/(000)     S/(000)     S/(000)     S/(000)     S/(000)     S/(000)     S/(000)     S/(000)  
Balance as of January 1, 2022     423,868       40,279       (121,258 )     432,779       168,636       (15,869 )     (4,225 )     271,595       1,195,805  
Profit for the year     -       -       -       -       -       -       -       137,905       137,905  
Other comprehensive loss     -       -       -       -       -               1,161       -       1,161  
Total comprehensive income     -                                       -       1,161       137,905       139,066  
Balance as of September 30, 2022     423,868       40,279       (121,258 )     432,779       168,636       (15,869 )     (3,064 )     409,500       1,334,871  
Balance as of January 1, 2023     423,868       40,279       (121,258 )     432,779       168,636       (16,267 )     (1,520 )     268,618       1,195,135  
Profit for the year     -       -       -       -       -       -       -       133,041       133,041  
Other comprehensive loss     -       -       -       -       -       -       1,520       -       1,520  
Others     -       -       -       -       -       (5 )     -       -       (5 )
Total comprehensive income     -       -       -       -               (5 )     1,520       133,041       134,556  
Balance as of September 30, 2023     423,868       40,279       -121,258       432,779       168,636       (16,272 )     -       401,659       1,329,691  

 

 

 

22

 

 

Cementos Pacasmayo SAA (NYSE:CPAC)
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