Cementos Pacasmayo S.A.A. — FY 2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023; filed April 29, 2024. This is an annual report, not a standalone fourth-quarter report. The provided filing text does not give separate Q4 financial results. Financial statements are consolidated, prepared under IFRS as issued by the IASB, and presented in Peruvian soles (S/). The auditor issued an unqualified opinion on the financial statements and internal controls.
Business context and performance
Pacasmayo produces and sells cement and related construction products, principally in northern Peru, where it is the only cement manufacturer. Cement, concrete, mortar and precast accounted for 94.9% of 2023 sales of goods. The company reported an estimated 23.9% share of Peru’s cement shipments. Peru’s GDP declined 0.7% and construction activity declined 8.0% in 2023.
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Sales of goods | S/1,950.1 million | S/2,115.7 million | Down 7.8% |
| Gross profit / margin | S/689.5 million / 35.4% | S/652.0 million / 30.8% | Profit up 5.7%; margin up 4.6 percentage points |
| Operating profit | S/337.6 million | S/355.3 million | Down 5.0% |
| Profit before tax | S/245.7 million | S/262.4 million | Down 6.4% |
| Net profit / margin | S/168.9 million / 8.7% | S/176.8 million / 8.4% | Profit down 4.5% |
| Basic and diluted EPS | S/0.39 | S/0.41 | Down S/0.02 |
| EBITDA / margin | S/481.8 million / 24.7% | S/493.9 million / 23.3% | EBITDA down 2.4% |
| Adjusted EBITDA / margin | S/518.3 million / 26.6% | S/493.9 million / 23.3% | Up 4.9% |
EBITDA and adjusted EBITDA are non-IFRS measures. Adjusted EBITDA excludes the S/36.6 million impairment of Pacasmayo’s legacy vertical kilns.
Cash flow, debt and liquidity
- Operating cash flow was S/412.3 million, versus S/111.8 million in 2022; management attributed the improvement primarily to lower inventory purchases and movements in payables and prepayments.
- Investing cash outflow was S/289.4 million, principally for the Pacasmayo kiln project. Reported capital expenditures were S/299.3 million, compared with S/190.1 million in 2022.
- Financing cash outflow was S/115.4 million, principally reflecting dividends. Cash and cash equivalents ended the year at S/90.2 million, up from S/81.8 million.
- Total financial obligations were S/1,573.0 million at year-end: S/383.1 million current and S/1,189.9 million non-current. Total debt was slightly below S/1,593.2 million in 2022, while its current portion fell from S/618.9 million. The company reports compliance with the Club Deal and bond covenants.
- Current assets were S/992.2 million and current liabilities S/689.4 million (working capital of approximately S/302.9 million; current ratio approximately 1.44, calculated from reported balances).
- The company repaid its remaining US$131.6 million 4.50% notes at maturity in February 2023 using Club Deal proceeds and settled the related currency swaps. Year-end debt was primarily the S/775.8 million Club Deal at 5.82% due 2028 and S/569.2 million local bonds due 2029 and 2034.
Material changes, outlook and risks
- Cement, concrete, mortar and precast revenue fell 5.8%; cement sales volume fell 14.5%, partly offset by higher average prices and a more favorable product mix. Total cement, concrete and precast shipments declined 13.9%.
- Gross margin improved as the new, more efficient Pacasmayo kiln began operating in the second half of 2023, reducing reliance on imported clinker. Imported clinker’s share of cement production costs fell to 4.0% from 16.3% in 2022. The kiln optimization added 660,000 metric tons of annual clinker capacity; the company states the approximately US$83.5 million project was completed.
- Management attributed lower net profit in part to the S/36.6 million impairment of old vertical kilns. The filing also records a separate S/11.4 million impairment of northern coal concessions in other operating expenses.
- Cyclone Yaku and coastal El Niño disrupted quarry access and shipments. Virrilá quarry operations stopped from May to September; the Rioja plant experienced an approximately seven-week electricity disruption. A rebuilt road linking the Piura quarry and plant was inaugurated in Q1 2024.
- The company expects recurring capital expenditures of approximately S/75 million annually over the next three years. It provides no numerical sales, earnings or margin guidance. Management cites infrastructure and housing needs as potential longer-term demand drivers, while noting that infrastructure projects and construction demand remain uncertain.
- Key risks include dependence on northern Peru and self-construction (about 73% of cement sales), political and economic uncertainty, weather and transport disruptions, energy and coal costs, competition, and currency mismatch. The company says 25.7% of 2023 costs were denominated in U.S. dollars; it has no long-term coal supply agreements or coal-price hedges.
- A S/29.6 million claim asset relates to mining royalties paid under protest for 2008–2009. Management and its advisers believe recovery is highly likely, but the dispute remains unresolved. The auditor identified uncertain tax positions as a critical audit matter. The company also discloses that tax authorities may review open tax years; it is not currently party to material legal proceedings.
Important facts for investors to verify
- Whether demand, volumes and construction activity recover, and whether pricing and product mix continue to offset volume weakness.
- Actual kiln ramp-up, cost savings and emissions benefits, including whether reduced imported-clinker use is sustained.
- Debt repayment and refinancing needs, covenant headroom, and the effect of working-capital changes on cash generation.
- Progress and accounting treatment of the S/29.6 million SUNAT claim, and any changes to tax contingencies or provisions.
- Exposure to El Niño, quarry access and electricity interruptions, as well as the cost and duration of any operational disruption.