Earnings call transcript Q4 2022

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Operator

Good day, everyone, and welcome to the Cementos Pacasmayo Fourth Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Claudia Bustamante. Ma'am, the floor is yours.

Claudia Bustamante

Thank you, Matthew. everyone. morning, Good

outlook an the Chief on Chief is our questions. Humberto with call term. the Mr. follow the short commentary Officer. quarter, call Joining then turn on Officer; call and our with our begin Executive our Nadal our over focusing Mr. strategic of and Mr. will Nadal, the Mr. me will your Pereira today primarily for on overview We'll to Manuel then Financial additional medium financial Ferreyros, results.

that this in Descriptions statements uncertainties are and therefore note these of company's other projections, call Please are forward-looking will set risks results. filings. regulatory that statements. relate trends that risks are include might These not matters the beliefs, and to certain historical affect facts to forth future expectations, subject or and events

that, over now call With to Mr. to the like Nadal. I'd turn Humberto

Humberto Nadal

and today. Thank conference today's you, for call, you Welcome, us everyone, Claudia. thank joining to

This deliver strategy, quarter, we continue led results. outstanding us our has which to focus on to

During and in a growth similar in XXXX, revenues growth year-over-year. EBITDA X% level achieved we over

the increased Moreover, year. for an record is XXXX was year considering profit a already all-time This substantial especially our relevant XX.X%. that

that our pillars: these profitability We are three because sustainability, of of convinced possible focus digital are transformation levels innovation. main on and

to uncertain times. continue to deliver to need and the these will focus We aspects especially on staff best possible the results

for our and mentioned operating our future before, is and company's have we key fulfill at As our sustainability to purpose. core

cement XXX reach XXXX. have necessary of kilograms as zero, ourselves the committing On emissions signed actions return COX Peru per net the to industry to the the on of environmental front, roadmap by we to an implement net

XX% reduction working fronts: industry coprocessing; the commit average XX%. and this, and of -- work of importantly, by the that most of secondly, minimum allows on we factor our need promoting ourselves continuing to To framework regulatory by achieve of two a first, to to clinker

is concrete factor cement XX% has on on lab natural clinker of factor have completed even The our Pacasmayo finance average a working issue, center though last already this under XX%, that and below we results clinical can a XX%. worked of level cement reduction. of at the On hard this already by are the continuing

this for much market in mention We that have like front, procedure with very expect to cement I'd to our [indiscernible] ready our purpose. XXXX. is aligned briefly

began a minutes XXX to During with of with influence we of this provide the year, pilot improved lending area conditions.

are many parasites, areas diseases, have know, insects As may of They to the floors others. Peru have their you floors. in sources in These proper houses. infection, among houses across of the poor in anemia, the respiratory have and the bacteria

near cement the We them home. looks project in with look to together to scale be future build lives excited more to able for this to to This improve the project a forward floors and provide very and of better the people.

digital to on transformation. Moving

past business the of enhancing years, been digitalization. we have couple on For model through working our

clients We've developed different our in and digital stakeholders. tools

We the new to proposition. companies, customer, final are own bring construction our incorporating together a and hardware developing value marketplace stores

maximizing serving our experience. the on aims tools focused our to companies, to very construction For [indiscernible] transform user efficiency and remain management connectivity clients, the substantially we that increasing positive in

clients. designed virtual to platform to that to [indiscernible] us the consultancies. we and is Coming and as retail well very consumers development of respond solutions. tools professional is have builders, order technologies MundexPerto, format of training to expert custom-made our new vital enhanced in the promote the consumer, of to to And for ecosystem for quickly needs finally, adapt format a new as

variety tools, of well selling benefits [indiscernible] has as Perto hardware and and Nissan control as inventory and is targeted stores the stocker wide order to promotions. opportunities a

maximize enhance to We our that and new develop future support tools growth. and both ones and current our continue company's will strategy

absolutely is of our our a innovation new that the country. goal vision our provider of innovating development XXXX with building To convinced key are we solutions are from deriving and progress both leading solutions, products in of and services. we becoming to contributing revenues of our nontraditional achieve of supporting Finally, XX%

to develop innovation for in We still our an seek it's products for building continue infrastructure fit that area solutions to products that's in Peru. lacking since are

also it income. our to the the to want since We proportion as extend segment the of self-construction solutions remains largest

so retail always they During in anticipate XXXX, platform helps to anticipated to fast, clients, and ramping that IU, being We selling money the flexible construction to a staying developing needed that believe save for project. and needs magma creating continue be we'll able consumers our the and can small we started reach by close directly value. sales the

to turn I to Manuel finance. now more go the call detailed over into will

Manuel Ferreyros

XXXX, morning, Humberto. compared gross increase the increased quarter. Good year, fourth year, prices consolidated EBITDA to you, to in a million, Fourth XXXX of when X.X% the XX.X% to quarter with due Thank quarter, the same PENXXX.X the mainly expense the million a of and compared Similar, period PENXXX to revenues when cement nonrecurring increased in last everyone. profit of were quarter inflation. to line baggage fourth due increased period decrease mainly same X.X% a was when of compared last this

similar was Despite EBITDA increase this previous expenses, year. this quarters to this quarter of

increased of profit X.X% same due period increased X.X%. when last XXXX, mainly decreased Gross and consolidated XX.X% increased revenues compared EBITDA to costs. and sales to year, the During increased

the use to clinker. As we therefore, were use less able our and, clinker of imported own optimize

respectively. personnel year higher increased Administrative the year salaries profit as larger whole expenses is negotiated for is of increase quarter a bonus as few share. sales and Turning due years first XX.X% fourth employees' compared operating in year XX.X% to a XXXX fourth has well well to and XXXX, line the that every to the expenses the during for an with increase the impact of This quarter expenses. the in and increased as and higher whole union as

expenses to sales larger when well force and advertising the fourth the increased in same increase to period expenses year, quarter XX.X% in the XXXX. from compared of as fourth significant last due savings as quarter mainly Selling in during of derived personnel a promotion XXXX an

XXXX, expenses and when XX.X% well for mainly to profit compared and increased to higher salaries increased selling union as tape the as payment. higher before XXXX, an During mentioned share, provision bonus as the due

cement of XXXX different on increased in fourth the -- Sales segments. to during same the 'XX period compared last during Moving second of X.X% the year to XX.X% quarter the the of full year. and when

biggest of bagged compared points in increase due to continue year, demand, last the driver margin to gross period quarter and same the electricity. percentage decreased to mainly when cement this of As of X.X sales be coal the price the

percentage of XXXX, X.X were able imported margin to raw own gross points the as lower and increased optimization of in with we some mitigate clinker capacity. our of during material use increase However, cost

mainly quarter period to slowdown concrete the year, and works. of decreased previous mortar private the sales whole in to volume fourth of public a During when payment compared in significant same XX.X% sales and XXXX, XX.X% year due the and for

XXXX, decision higher-margin increased points to fourth of services. to to the fourth X.X However, XXXX compared quarter in to year quarter gross margin of the the compared in whole focus XXXX due percentage X.X on and our mainly percentage XXXX points

XXXX and for due the to of respectively, sales same precast of quarter compared the the year sector. volume decrease whole period XX.X% to XX.X% last a in fourth compared the mainly and public XXXX Sales to materials of year decreased in during XXXX,

and XXXX, which we quarter sold material well in due missing prices mainly Gross raw when out of year, higher of in during of Heavy larger the fixes margin the fourth inventories demand lack as was XXXX to an adjustment negative costs. of as low projects. precast increase and and of carried to for this led cost dilution

profit operating XXXX, profit this due XX.X% to the quarter. as for a decreased quarter XXXX of Net compared nonrecurring fourth expenses the quarter to fourth of primarily decreased increased

During well to for XXXX, whole XX.X% material. since the pressure to of compared a as revenues cost in streamline profit some operating XXXX, period profit we our the were higher to raw due the as prices inflationary increased year able despite primarily increased

our mention terms February, costs with $XXX the incurring that was exchange debt-to-EBITDA is our debt, ratio paid rate this we It comfortable we is effects. due level million to important X.X, without In bonds international which it. any to feel very XX-year of of a remaining additional

As To we to current ability quarter pay low deliver continuous to debt obtained profitability. this unchanged. had resilience we so for summarize, our levels bond, remain a this already mentioned results and before, show our

Now can questions. we the please call to open now

Operator

[Operator Instructions].

question first Your is coming Tunde from Ojo Harding. from

live. is line Your

Babatunde Ojo

you. Thank

it. just it I wanted have You couple But on clinker, a of So, But the right? a to you sort dilutes of the others. just your and year. margin import allow few because I'll sorts to this get use maybe use ask forward understand at regarding first on Linker and each time queue, of is use I your the imported of strategy of going reduced that back questions

future? you of Do to near going us completely stop you a And in the you plan have it the what And to in imported coming are left? volume inventory have XXXX? year use an do clinker

Humberto Nadal

Sure.

operative in expansion year. you As drinking because the reason was of Pacasmayo abruptly. speak. we we stopped going have would of XXXX The -- to plant. towards But of imported the rose quarter our -- been we're in end clinker we third This as ports know, we are demand be this forward, going have completely

we our of will come absolutely And this future stock. quarter new in this need [indiscernible] tons security point, And year. we clinker, imported around hold of which XXX,XXX the see at no our in because in, third are

Babatunde Ojo

right? tons, XXX,XXX

Humberto Nadal

Yes, XXX,XXX.

Babatunde Ojo

would you Okay. year? last that year? to how going that this use And with And are compare

Humberto Nadal

And cost using is coming last end to Yes. months I it, going the mean of we're mean go year. what average operation. I similar the towards we towards before the to into use we're

Babatunde Ojo

Okay. All right. enough. Fair

base in release, region for your growing central you high at from mentioned, XXXX I question coming look the as -- you and I I the have the impact you the the of on previous in because of year. a shared financial data year. The year of not still higher when you but decline Southern your is sort declined sort last despite But sort which a this the have reason volumes, had was well, was it press wondering other

shipments you go? have wondering areas right construction growing your Thanks. And are in wondering points competing to having is those do Because with those day are you done less to I And as just you was products. much those are -- than where implementations. Or we opposed mentioned was to reconstruction used I why now? also projects some a

Humberto Nadal

back have year. when you the on see we last previous Yes. the go two you three What back year, have to growth, the or numbers have years. Sure. XX% I of you grew mean, in -- more to than last to happened was go

on up by were decreased we two X% So percent. net even though the XX-something years, the last we of

the of regions other The grow not XX%. country did

we years, three they're up, grown than So capturing understand have regions. math the course, over last the uses and of south much if more the the

to and approve last north of has a going on has construction, over do and I by The has few been to the to that it remaining. reconstruction fact that there's the lot with years, thing still Going mean, the is packages. the the government something off

package. a finish We

to are these government I have packages three coming it believe quickly they I how approve, running. based can all get on and And depends, the there the Now or contracts in. up mean, two more agreement GXG

Operator

[Operator coming Suarez from question Instructions] Your next Scotiabank. is from Francisco

is line live. Your

Francisco Suarez

is your the relates little blockades The within coming disrupting where footprint to actually bit with southern from the want actually Piura and question your area that the social understand this the first of shipments I of a Pacasmayo road Is did the or have that to footprint. much unrest. more the portion southern I happened? concentrated portion better

can from well. the the the concentrated if think Lima I been what some knowledge, the much to you help country. year social might forward? that risks extent, be has understand something in in occurring and If need this to shipments disruptions southern that on Piura. the is from us market to bit I going little portion the the actually as because understand wanted in But of And of are my more a unrest to

levels it a brief flow my I may. And I the of trying your here. -- And XX%. to conversion was free the seems related Pacasmayo want CapEx math with if ratio that do just be somewhere excluding the might question, overall I to expansion, second at cash

cash to your have be wanted that the if excluding is the may for CapEx free expansion roughly Pacasmayo. might you. to -- just expansion And of conversion Thank what and you number So check for XXXX expectations flow accurate.

Humberto Nadal

Chao some to more area going Good calm, to unrest the Northeast interruptions Humberto. it's focused much been social Francisco, Peru the of in in you. though the Clearly, hear been on part southern even [indiscernible]. have from of Chimbote. remains has there The pretty

six, So, what days in all in been the going but could South four, five, a of southern part of they've little has bit to had our that the where at on affected, not ahead. area compared operation nothing go eight

currently, we speaking as something And the there's right now, no. are that week towards So, of second no was happened January. roadblocks

scale fair on right part. question, you're And that's number. the the second yes, So the part of conversion

Francisco Suarez

think on do that conversion forward? the Okay. you might Perfect. sustaining be flow that, cash that And something be you might going ratio year free

Humberto Nadal

mean, almost the done, project, I take that. out is once you indeed, be Yes. we Pacasmayo should which sustaining

Operator

Your is Harding. next Tunde from coming from question Ojo

Your is line live.

Babatunde Ojo

them of left of expectations, or Just be in follow-up into your for performance three can revenue, EBITDA of is will few sort have what a can sort you of terms that some like of if margins, provide any XXXX, provide all growth volume guidance you expecting those questions helpful. I you're maybe

Humberto Nadal

volumes Sure. that, like last in we to million It's predict a area. embrace we X.X of the that but hard year despite around closed somewhere tons, middle would to country social remain with very and on such

In as have terms number on third will our margins making of quarter EBITDA own start I depending that start kiln in then we EBITDA until our higher. going they're coming Pacasmayo be clinker margins, and that to into the four we be think jump clinker, imported should not stable

Babatunde Ojo

now? Okay. the for because talking year you XX%, about average you stable numbers When talking the are XX% you you have XXXX? are EBITDA So, or mean margin different across about

Humberto Nadal

can for You margin. calculate EBITDA

Babatunde Ojo

at it is would the said it What you stable for for average be number it XXXX? QX, asking I'm stable. No. be you when will

Humberto Nadal

last we I the think year. should Yes, of be volumes around

Babatunde Ojo

I'm about EBITDA margin. the not I'm No, volumes. about talking

it until said You QX will you Yes. when be Can me? stable -- hear

[technical difficulty]

Humberto Nadal

year. whole XX% EBITDA the for margin

Babatunde Ojo

XX%, you said?

Humberto Nadal

XX%. Yes.

Babatunde Ojo

XXXX? terms price helpful. pricing, sort additional you of for are very any looking of in at you growth That's putting pricing? Okay. are And in What

Humberto Nadal

a we'll in that always last we price of the We're going to think in I on remain going market We very specifically beginning our levels. aggressive year. price our a we've terms in that the -- vessel But been year. is region, sure depends or how retain behaves inflation this away the be profitability at like that of country. lot

Babatunde Ojo

Yes.

in earlier year January. you in said put you pricing So, this

Humberto Nadal

Yes.

Babatunde Ojo

you Like did can in you give sense a period? percentage average of on what that

Humberto Nadal

Around X%.

Babatunde Ojo

Around X%.

do coming Or from Okay. you capacity looking That's doing wondering your last prior? Pure that? anything you Pure. And kind And capacity expansion or reach me I'm to just helpful. Pacasmayo capacity one disclosure. clinker up, need next of is what for increasing very just on clinker wanted after Are forward. going XXX% utilization to since what I is don't understand you're of in optimization terms at

Humberto Nadal

very a with. good question That's

produce have it's X.X what stressful able will number of capacity. is think Gen be very tons cement which answer. we with Once number four, a own we our I to around with the four. Clink will clinker million

[indiscernible]. XXX% capacity as we on the So, at will be turn as we soon

even X%, million if XX% or be from future because it's to coming bit going on, X.X post on clinker the smarter setting to a of new goes goes tons, foresee What up a than plant much demand always to or capacity. little used import We on XX% only depends don't a XX% there in it demand. up

I foresee projects. any So, don't

[technical Difficulty]

Babatunde Ojo

Hello?

Babatunde Ojo

Yes. I the foresee think term. any you it last. at for near expansion the But you that in lost don't you I I get

clear. that's think I

Humberto Nadal

No.

Babatunde Ojo

Yes.

is year? kind aggregate terms still in level you for at in you CapEx much of looking are at are ongoing. looking Pacasmayo so of this So, XXXX? Because CapEx, how What for

Humberto Nadal

spend $XX million. normally We about

Babatunde Ojo

Okay. Thank Alright. you.

Humberto Nadal

talking sustaining [indiscernible] We're CapEx...

Babatunde Ojo

is what CapEx XXXX, Pacasmayo continued including But total for expansion. Yes. your

Humberto Nadal

of or our 'XX 'XX CapEx will $XX and... million, sustaining be Around

Difficulty] [technical

Babatunde Ojo

that number your again, sheet, had balance of mean, me debt, you think refinanced bit right? cos on were debt, of I that the -- one that I sort but million. mentioned You on for a get $XX your you of it is your Last I course, I Okay. little part of part. didn't

you you If terms would what mind at higher did financing, a repeating it cost. don't of in

So, expect we forward? should interest going expense higher

Humberto Nadal

addition any don't expect we No,

difficulty] [technical

years The XX trade that X.XX, have was all-in around ago X.X% we The of bond now issued was we and swap a plus.

[technical difficulty]

Babatunde Ojo

up. I response. breaking get your You're didn't all

I Sorry. don't what... know

Humberto Nadal

hear in to -- there? mean have You you mind, did me I bear

Babatunde Ojo

hear all. not didn't No, I you. at No,

You were a mute minute. for

Humberto Nadal

Do me you hear now?

Babatunde Ojo

correct. I hear can you Yes. now,

Humberto Nadal

the Okay. to is, able when to low, ago, just repaid if we -- here mean, X.XX% What at we of bond. new to repay bonds, two of be I swap, of an Those they X.X credit $XXX trying a million is coupon structure add you X.X%. managed banks cost were rate explain plus the I was the still credit at corporate of and the years to have were with rates X.X% all-in

cost lower. So, if the is financial anything,

Babatunde Ojo

Thank Okay. me. Got you much. All for that’s Thanks, so all it. right.

Operator

questions further no lines are the this at There on you. Thank time. phone

Claudia Bustamante

I webcast. questions the two from have

first, nonrecurring -- give you the expenses that can the could fourth on more in quarter? So, color occur

Manuel Ferreyros

expenses in the pay with basically union, to as in is, second mentioned, has basically it's this been Yes, a unions bonus nonrecurrent the that the in with higher year, we a is It's increase than year the or an compare we third. and we the and negotiate arrangement three-year and previous there And impacted the heavily in year. have this impact higher the first we year much much impact has with the first.

employees. profit an and is there for the the depends on profit, or increase Also, that share

the basically, in two main -- impacts So the main exchanges. that's two

Claudia Bustamante

forward? your is, question to going next cost strategy manage what The is

Humberto Nadal

efficient Yes. we costs working I related our always main mean and energy. are to to extremely are trying be

to that So, coal mostly electricity the are pressure. are inflationary impacting us the due things

efficient coal I we're trying efficient So, gas, also going looking the process. to and more -- mean, a forward, we our most buying we're to go make into can

Claudia Bustamante

plan one mitigate do risk geographical line? your having in not you last how diversification the the is of And to top

Humberto Nadal

grew the matter of is, question. That's a very XXXX, fact I we good the XX%. And mean,

hand, enormous north has region potential diversified example, Peru. an give clearly, we would If of into and I grow XX%. are country, the us focused years one to that mean, very we we an neighboring XX yes, have offer. But on taken it's a So a to to are

to are potential be part we exposed north think even very there so focused but that pretty is a pays in that immense still risky. it we the yes, one to So is growth of terms of Peru, strategy, region, though it in

I raise and my both our on remarkable going advantage XXXX strategy so a closing us, significant results. achievement for want no go financial of remarks. of I'm I questions, year with to terms think more year, to a in an remarkable and was in there's some

that levels the world even more even for particularly for We and higher country. of are XXXX challenges aware uncertainty and brings our

Although framework, the political economic have we are advantages. competitive definitely by and influenced we very Mac two do we believe clear

the First, conflict. country has north less of it a the slight made has dynamic the implied different

importantly, most transformational the has to and our much on second resilient innovation And and focus us literal be more with provided tools adapted.

terms Finally, being of benefit positively institutions an that behaviors the we of and there's a little impact. those has little excellence. -- item behavior focused our on there understand more what on of is are less a of lacking It in we're focused can we

We at stronger even will of change, by very happen the region, working for future to only which in we a strongly are future today. altogether. much belief significant and in the you believe country. of time our We crucial influence Thank time the

Operator

today's you, event. This everyone. Thank concludes

your wonderful You participation. have this may time, disconnect you at day. a and for Thank

Cementos Pacasmayo S.A.A. (CPAC) 15 Feb 232022 Q4 Earnings call transcript