Cementos Pacasmayo S.A.A. (CPACASC1) Earnings Call Transcript

Good day, ladies and gentlemen. Welcome to Pacasmayo's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] And please note that the call is being recorded. [Operator Instructions] I would now like to introduce your host for today's call, Mrs. Claudia Bustamante, Investor Relations Managing Director. Mrs. Bustamante, you may begin.

Thank you, Roberto. Good morning, everyone. Joining me on the call today is Mr. Humberto Reynaldo Nadal, our Chief Executive Officer; and Ms. Hirahoka, our Chief Financial Mr. Nadal will begin our call with an overview of the quarter, over primarily on our strategic outlook and operational highlights. As will then further with additional commentary on our financial results. We'll then turn the call over to your questions. Please note that this call will include certain forward-looking statements. These statements relate to expectations, beliefs, projections, trends and other matters that are not served at and other for subject to risks and test might recession. The presence of these risks are set for in the content. With that, I'd now like to turn the call over to Mr. Ideon.

Thank you, Claudia. Welcome, everyone, to today's conference call, and thank you for joining us to discuss our third quarter results. During the third quarter of 2026, our operational performance remained exceptionally positive. We experienced a 14.2% increase in the sales volume of cement, concrete and recap. This robust demand, particularly for structure works and back remain for sale construction directly contributed to a 15.3% rise in revenues, which reached PEN 657 million. We successfully leveraged this growth along by higher selling prices and cost efficiencies to achieve a consolidated EBITDA of PEN 26 billion, an outstanding 45% increase compared to the third quarter of last year. considerably, our consolidated EBITDA margin expanded by 7 percentage points to reach an impressive 4.9%. Complementing this strong performance, our net income rose by almost 70% to PEN 121.4 million. In addition to our strong financial performance, we are driving growth through high-margin specialized construction solutions. Faster quoting delivery, high precision, full control of the construction process and enhance ability in aggressive environment. demonstrating strong demand for the solutions we secured an additional 44 kilometers of concrete heparin Ira River defense project. We also recognize that great infrastructure built by -- to support the talent in Northern Peru, our content ecosystem continues to thrive. We now have more than 5,000 men and with access to benefits and learning opportunities. alongside a 157% mentigrowth in accumulation of 1 football for a formal growth what we build together growth as well. Finally, we continue to win trust and generate a positive into in the country. But we may be also an that we reached 9 provision mainted in America ranking by chemical social features in the cement sector for 11 and interacted years. We also received significant recognition for our community is--is including within the first vision of a social talu2026 awards for Funko of Beane. Thanks for this collaborative effort to accessory revive the prevalence of ilealemiaditi of Elias from 7% to 9%. Magnin deceases and activities from listing milestones is a direct result of hard work and the site of an extremely committed team. I will now turn the call over to Ely to go into a more detailed financial.

Thank you, good afternoon, everyone. For the third quarter of 2026, our revenue growth was very strong, reaching PEN 667.4 million up to 16.3 percentage compared to third quarter 2. This brought our revenue for the first 9 months of the year to PEN 1,789 million, representing a 14.4% increase year-over-year. This performance was primarily driven by higher sales volumes of both segments for the public and private segment as well as cement. Gross profit for the quarter increased by 33.7% to PEN 299.4 million, mainly due to improved selling prices and a better cost structure. Turning to operating expenses. By 6.9% in the third quarter '20 to PEN 31.2 million and by 5.1% for the first 9 months of the year. This reduction across both periods was mainly driven by lower personnel expenses, primarily reflecting a lower collective retaining volumes compared to last year. On the other hand, selling expenses for the quarter increased by 9.8% to PEN 27 million, mainly driven by higher presented analyst compensation costs. Moving to overall profitability, our consolidated EBITDA reached PEN 231 million for the quarter, an outstanding 45.1% increase. For the first 9 months of the year, EBITDA rose 37.0 percentage to PEN 585.8 million. Consequently, our EBITDA margin expanded by 7 percentage points to 34.9% in the third quarter. This remarkable profitability was driven by top line growth, but also by lower electricity rates secured to our new long-term energy contract combined with a lower. Breaking down our results by business segment. Cement revenues grew 21.3 percentage to PEN 571.6 million in the third quarter. In terms of margins, the gross margin for same in the third quarter of 2016 expanded by 2 percentage points to 50 percentage, highly supported by new energy contract that lower our average cost as well as the cost efficiency from a lower income factor mentioned before. For the Concrete Payment and Mortar segment, quarterly revenues decreased by 19.7% to PEN 65.6 million. This decline is due to reduced volume following the finalization of deliveries for the China quota, Montupet and Pura Air portfolio. However, despite lower volumes, gross margins expanded significantly by 21 percentage points in the third quarter to reach 19.8 percentage. This notable expansion was driven by a disciplined commercial strategy focused on profitability, along with cost savings following the completion of the airport projects. Our precast segment also delivered solid progress. Revenues rose 23.1 percentage to PEN 11.3 million in the third quarter of '26, primarily due to stronger demand for compete papers for, particularly in Pura Rogelio and Chile. Gross margin expanded by 5.1 percentage points to 16.1 percentage in the quarter, reflecting higher sales volumes and lower cost of sales per tonne. Finally, our consolidated net income for the third quarter increased by 69.8 percentage to PEN 231 million. This strong bottom line growth and direct from higher operating profit. Additionally, we maintained a very solid balance sheet with our net set ratio reached 2x as of September 13, 2023. To summarize, our third quarter performance reflects a successful execution of our commercial strategy and the structural cost efficiency, allowing us to expand our margins significantly across our set. Operator, I will now open the call for questions.

[Operator Instructions] Our first question comes from Gabriel Pérez Flórez, the CrediCorp Capital.

Thank you for the presentation. Do you hear me?

Yes, we can hear.

Okay. So my first question will be, given the strong volume growth in this quarter, how sustainable do you believe the current recovery in cement demand is heading into -- and my second question would be regarding the potential impact of El Nino on cement demand in the region. .

Yes. Regarding the projections, I mean, we expect that to see a -- but we still believe that in next year, we will see a growth of approximately 4% of volumes. But like I said before, it's all on an.

Our next question comes from Francisco Suarez from Scotiabank.

The question that I have relates with -- it was a great improvement in overall margins this quarter, far more than we expected. Is there -- my question relates with the potential synergies between and the network of operations within. Is that already taking place because it seems to me that it's -- we are at early stages of those synergies unfolding. But I would like to understand it already. You have been benefited from potential savings from procurement, for instance, or anything on that front?

Francisco, thank you for your question. I always hear from you. The answer will be no. we are still in a very early stage. So there's no reflection read of any synergies in our results.

Fantastic. And also, perhaps this is actually a question for Holcim, but -- now Heidelberg, we have seen a similar move in the central market of Peru. Do you see potentially expanding yourselves in other regions within Peru?