Cementos Pacasmayo S.A.A. — FY2021 Form 20-F
Business context and reporting period. This is the company’s annual report for the fiscal year ended December 31, 2021, filed April 28, 2022—not a standalone fourth-quarter filing. The filing does not provide a clear standalone Q4 financial result. Consolidated statements are prepared under IFRS in Peruvian soles (S/). Pacasmayo produces and distributes cement and related products, primarily in northern Peru, where it reports being the only cement manufacturer.
Financial and operating performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Sales of goods | S/1,937.8 million | S/1,296.3 million |
| Gross profit / margin | S/559.4 million / 28.9% | S/375.3 million / 29.0% |
| Operating profit | S/318.3 million | S/176.1 million |
| Profit for the year | S/153.2 million; 7.9% margin | S/57.9 million; 4.5% margin |
| EBITDA / margin | S/453.9 million / 23.4% | S/315.3 million / 24.3% |
| Cash from operating activities | S/170.6 million | S/331.4 million |
| Cash and cash equivalents at year-end | S/273.4 million | S/308.9 million |
| Financial obligations | S/1,545.4 million | S/1,268.6 million |
EBITDA is a non-IFRS measure defined by the company; it should not be treated as a substitute for operating profit or operating cash flow.
- Volumes and market: Cement shipments rose 40.4% to approximately 3.6 million metric tons, a company record; management estimates a 26.8% share of Peru’s cement shipments. Total cement production was 3.632 million metric tons versus 2.590 million in 2020.
- Cash flow and investment: Investing cash outflow was S/91.8 million, primarily for plant maintenance and capital expenditure; financing cash outflow was S/130.1 million. The company reported capital expenditures of S/97.3 million, up from S/62.7 million.
- Liquidity: Current assets were S/1,009.4 million and current liabilities S/722.2 million at year-end. Cash was S/273.4 million. Current financial obligations were S/451.0 million, compared with S/65.2 million a year earlier.
- Debt and hedging: Financial obligations comprised S/450.964 million current and S/1,094.391 million non-current. The company reported US$132 million of cross-currency swaps to hedge dollar debt; adjusted debt after the swaps was stated as S/1,435.3 million.
Material changes versus FY2020
- Sales increased 49.5%; management attributed growth mainly to higher cement volumes and prices, with cement revenue up 49.9% and average cement price up 10.9%.
- Operating profit rose 80.7% and net profit 164.1%, recovering from the pandemic-affected prior year. Earnings per share increased to S/0.36 from S/0.14.
- Gross margin was nearly unchanged at 28.9%, while EBITDA margin decreased 0.9 percentage points to 23.4%. Imported clinker, used to meet demand, contributed to cost pressure.
- Operating cash flow fell 48.5%, primarily reflecting inventory purchases, receivables and higher tax payments. Inventories increased to S/605.2 million from S/460.6 million.
- Energy represented approximately 25.3% of cement production costs versus 28.8% in 2020; imported clinker represented approximately 21.5% of production costs versus 10.1%.
- Cash dividends declared for 2021 were S/338.2 million, or S/0.79 per share, compared with S/98.5 million, or S/0.23 per share, for 2020. The company describes the 2021 distribution as including an extraordinary dividend.
Outlook, management commentary, risks and unusual items
- Management said the exceptional 2021 demand increase would be difficult to replicate and that maintaining current volumes would be challenging in 2022. It did not provide a specific 2022 earnings or sales forecast.
- The company plans approximately US$70 million to optimize the Pacasmayo plant, adding an estimated 600,000 metric tons of annual clinker capacity, with completion expected in the second half of 2023. The project is intended to reduce imported clinker use. Recurring capital expenditure is expected to be about US$25 million annually over the next three years.
- Key exposures include Peruvian political and economic uncertainty, inflation and sol volatility, COVID-19 disruptions, construction demand, natural disasters, and higher energy and freight costs. Coal accounted for 11.6% of cement production costs in 2021; imported materials represented approximately 39.7% of production costs, according to the filing.
- Debt instruments contain financial and other covenants. The company entered into an S/860 million club-deal facility in 2021 at 5.82%, intended to refinance obligations maturing through February 2023; the first S/159 million drawdown occurred in January 2022. Management reported compliance with applicable covenants at year-end.
- A mining-royalty dispute remains outstanding. Following a 2021 tax-court resolution contrary to the company’s position for 2008–2009, Pacasmayo made partial payments under protest totaling approximately S/38.2 million and is pursuing legal recovery. Management and its legal advisers believe a favorable outcome is highly probable.
- Auditors issued unqualified opinions on the financial statements and internal control over financial reporting. The audit identified revenue recognition of customer discounts as a critical audit matter. The filing reports no material legal or administrative proceeding currently involving the company.
Most important facts for investors to verify
- Whether strong cement demand and pricing can be sustained without further margin erosion from clinker imports, energy, coal and freight costs.
- Progress, total cost and timing of the Pacasmayo clinker-capacity optimization, and whether it reduces imports as planned.
- How the S/860 million club-deal facility is drawn and used to refinance near-term maturities, and the company’s ongoing covenant headroom.
- Cash conversion and working-capital needs, particularly the inventory build, alongside the unusually large 2021 dividend relative to annual profit and operating cash flow.
- Developments in the mining-royalty dispute and potential tax assessments, including recovery prospects for the S/38.2 million paid under protest.