Business Context and Reporting Period
Company: Cementos Pacasmayo S.A.A. (Pacasmayo)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2024
Business Overview: Pacasmayo is the sole cement manufacturer serving the northern region of Peru. It produces cement, concrete, precast products, and quicklime. The company operates three production facilities (Pacasmayo, Piura, and Rioja) with a total installed cement capacity of approximately 4.9 million metric tons. Its primary market is the "auto-construcción" (self-construction) segment, which accounted for approximately 74.8% of cement sales in 2024.
Key Financial Metrics (2024 vs. 2023)
| Metric (in millions of S/) | 2024 | 2023 | Variance |
|---|---|---|---|
| Sales of Goods | 1,978.1 | 1,950.1 | +1.4% |
| Gross Profit | 728.5 | 689.4 | +5.7% |
| Gross Profit Margin | 36.8% | 35.4% | +1.4 pp |
| EBITDA | 549.3 | 481.8 | +14.0% |
| EBITDA Margin | 27.8% | 24.7% | +3.1 pp |
| Net Profit | 198.9 | 168.9 | +17.8% |
| Net Profit Margin | 10.1% | 8.7% | +1.4 pp |
| Operating Cash Flow | 321.1 | 412.3 | -22.1% |
| Total Debt (Outstanding) | 1,493.2 | 1,573.0 | -5.1% |
Note: All figures are in Peruvian Soles (S/). Exchange rate used for USD conversion in filing: S/3.764 = US$1.00.
Material Changes and Operational Highlights
- Revenue Mix: Sales of cement, concrete, and precast products increased by 3.1% to S/1,906.8 million, driven by higher sales of concrete and mortar. This was partially offset by a 44.7% decrease in quicklime sales and a 23.2% decrease in construction supplies sales.
- Volume vs. Price: Total cement sales volume decreased by 3.7% compared to 2023. However, average pricing increased by 3.6%, contributing to revenue growth despite lower volumes.
- Cost Optimization: Gross profit margin improved due to operational efficiencies from the new Pacasmayo kiln (completed in 2023), which reduced reliance on imported clinker. Coal costs as a percentage of production costs decreased to 17.0% in 2024 from 23.1% in 2023.
- Impairment: Unlike 2023, which included a S/36.6 million impairment charge for vertical kilns, there were no impairment charges in 2024.
- Capital Expenditures: Total CapEx was S/96.9 million in 2024, a significant decrease from S/299.3 million in 2023, as the major investment in the Pacasmayo kiln was completed in the prior year.
Guidance, Outlook, and Risks
Outlook and Strategy: The company expects to spend approximately S/80 million annually on recurring capital expenditures over the next three years. Management aims to maintain market share in northern Peru while expanding into building solutions (precast, ready-mix) and digital transformation. The company is committed to carbon neutrality, having launched a new efficient kiln and an "EcoSaco" (biodegradable cement bag).
Key Risks and Contingencies:
- Political and Social Instability: Peru faces political uncertainty, social unrest, and high levels of extortion, which can disrupt logistics and affect customer purchasing power.
- Climate and Natural Disasters: Operations are exposed to El Niño phenomena, flooding, and seismic activity, which can damage infrastructure and disrupt supply chains (e.g., Cyclone Yaku in 2023).
- Energy Prices: Electricity and coal represent significant production costs. Prices are linked to global oil prices and market variables.
- Competition: While Pacasmayo dominates the north, competition could intensify if other manufacturers expand distribution or if imports increase.
- Tax Disputes: The company is awaiting a refund of S/29.6 million related to mining royalty disputes for 2008-2009, which it believes has a high probability of recovery following a favorable Constitutional Court ruling.
Investor Verification Checklist
- Volume Trends: Verify the sustainability of the 3.7% volume decline in 2024 and its correlation with the northern Peru GDP growth of 3.9%.
- Cost Structure: Monitor the stability of coal and electricity costs, which remain the largest variable cost drivers.
- Debt Covenants: Confirm continued compliance with financial covenants (Debt/EBITDA < 3.5x; Fixed Charge Coverage > 2.5x) on the "Club Deal" loan and local bonds.
- Tax Refund: Track the status of the S/29.6 million mining royalty refund from SUNAT.
- Market Share: Assess the impact of Holcim's entry into the Peruvian market (acquiring Mixercon) on Pacasmayo's competitive position.
- Dividend Policy: Review the approved dividend of S/0.41 per share for 2024 and the company's ability to maintain payout ratios given the decline in operating cash flow.