Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian cement manufacturer, filed this Form 6-K on September 12, 2019. The filing serves as a monthly report regarding the company's position in financial derivatives as of August 31, 2019.
Key Financial Metrics
The filing focuses exclusively on the fair value and performance of financial derivative instruments rather than comprehensive operational metrics such as revenue, profit, or cash flow.
- Derivative Instruments: The company holds Cross Currency Swaps for both coverage (hedging) and negotiation purposes.
- Notional Amounts: USD 132 million for coverage swaps and USD 18 million for negotiation swaps.
- Fair Value (August 2019):
- Coverage Swaps: PEN 14,922,168 (Asset).
- Negotiation Swaps: PEN 2,084,832 (Asset).
- Cumulative Year-to-Date Impact: A total loss of PEN 5,626,000 recorded for derivative financial instruments during 2019.
The filing does not provide clear values for total revenue, net income, operating margins, debt levels, or liquidity ratios.
Material Changes Versus Prior Period
Comparing the current month (August 2019) to the previous month (July 2019), the fair value of the derivative portfolio increased significantly:
- Coverage Swaps: Increased by PEN 19,446,111 (from a liability of PEN 4,523,943 to an asset of PEN 14,922,168).
- Negotiation Swaps: Increased by PEN 2,716,889 (from a liability of PEN 632,057 to an asset of PEN 2,084,832).
Despite the positive month-over-month shift in fair value, the cumulative year-to-date result remains a net loss.
Outlook, Risks, and Management Commentary
The filing includes specific disclosures regarding the valuation and nature of the derivatives:
- Valuation Methodology: Fair values are estimated internally using International Financial Reporting Standards (IFRS) and market data. These figures are preliminary and subject to change.
- Accounting Treatment: The cumulative profit/loss includes variations in fair value, exchange differences, deferred income, and accrued commissions. Some components are recorded in the statement of profit and loss, while others are in other comprehensive income.
- Risk Context: The derivatives are used to hedge corporate bond liabilities (coverage) and manage exchange rate exposure (negotiation).
The filing does not contain forward-looking guidance, management commentary on operational outlook, or specific risk factors beyond the inherent volatility of derivative valuations.
Investor Verification Checklist
- Verify the full 2019 financial statements to understand the impact of the PEN 5.6 million derivative loss on net income.
- Confirm the total outstanding debt and liquidity position, as this filing only details the hedging instruments (USD 132 MM coverage) rather than the underlying debt principal.
- Review the company's Form 20-F for comprehensive revenue, margin, and operational data not included in this derivative-specific report.
- Monitor future filings for changes in the fair value of these swaps, as the current values are noted as preliminary estimates.