Business Context and Reporting Period
This Form 6-K, filed on March 5, 2013, contains the English translation of the Annual Report for Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation) for the fiscal year ended December 31, 2012. The company, incorporated in Peru, is the first Peruvian cement manufacturer listed on the New York Stock Exchange (NYSE), having completed its IPO in February 2012. The company operates primarily in the cement, lime, and construction materials sectors in Peru, with subsidiaries including Cementos Selva and the DINO distribution network.
Key Financial Metrics
The following consolidated financial results are reported for the fiscal year 2012 (amounts in Peruvian Sols unless noted):
- Consolidated Sales Revenue: S/. 1,169.8 million (an increase of 17.6% from 2011).
- Gross Profit: S/. 456.8 million (an increase of 7.4% from 2011).
- Net Profit for the Period: S/. 155.6 million (compared to S/. 65.5 million in 2011).
- EBITDA: S/. 278.5 million (compared to S/. 166.5 million in 2011).
- Operating Margin: 19.71% (up from 11.95% in 2011).
- Net Margin: 13.30% (up from 6.58% in 2011).
- Total Assets: Increased from S/. 1.0736 billion in 2011 to S/. 1.8941 billion in 2012.
- Liquidity Ratios: Current ratio improved to 4.75 (from 2.13); Acid test ratio improved to 3.02 (from 1.42).
- Debt-to-Equity: Total Liabilities to Total Assets ratio decreased to 0.20 (from 0.45).
- Dividends: S/. 52.0 million declared, charged against cumulative results.
Material Changes vs. Prior Period
The significant improvement in net profit and EBITDA in 2012 compared to 2011 is primarily attributed to the absence of a S/. 67.2 million devaluation of zinc mining assets that negatively impacted 2011 results. Additionally, the company raised $256 million through its NYSE listing in February 2012, which substantially increased cash reserves and reduced the debt-to-asset ratio. Operational growth was driven by a 15.3% increase in cement shipments (2.23 million metric tons) and a 22.0% market share in the national market. The company also expanded its distribution network, increasing DINO vendors from 200 to 300.
Guidance, Outlook, and Risks
Expansion Projects: The Board approved a new cement plant in Piura with a capacity of 1.6 million metric tons per year. Construction is expected to begin in the first half of 2013, pending final Environmental Impact Study (EIS) approval. The company is also advancing the Bayóvar Phosphates Project and the Salmueras Sudamericanas brine project, with basic engineering studies expected to conclude in mid-2013.
Operational Improvements: Completed projects in 2012 included increasing clinker production capacity at the Pacasmayo plant to 1.5 million metric tons and modernizing bagging plants. The company aims to join the top 10% of Latin American cement companies in profitability and environmental responsibility.
Risks and Contingencies: The filing notes no known judicial or administrative proceedings with a significant impact on financial position as of December 31, 2012. However, the new Piura plant is subject to regulatory approval for its EIS. The company faces standard industry risks related to global economic deceleration, though Peru's GDP growth of 6.29% in 2012 provided a favorable domestic environment.
Investor Verification Checklist
- Verify the final approval status of the Environmental Impact Study (EIS) for the new Piura cement plant.
- Confirm the timeline and capital expenditure requirements for the Bayóvar Phosphates and Salmueras Sudamericanas projects.
- Review the detailed audited financial statements attached to the filing for a complete breakdown of cash flows and debt obligations.
- Monitor the utilization of the $256 million raised from the 2012 NYSE listing against the stated investment plans.
- Assess the impact of the 2011 zinc asset devaluation on future comparability of earnings.