Cementos Pacasmayo SAA Q3 FY2026 earnings call

• Financial Strength and Efficiency: The company reported a 16.3% revenue increase to 667.4 million soles and a 45.1% rise in consolidated EBITDA to 233.1 million soles. Net income surged nearly 70% to 131 million soles. Profitability improvements were driven by higher selling prices, cost efficiencies, lower electricity rates via new energy contracts, and a lower clinker factor.
• Operational Growth Drivers: Sales volume for cement, concrete, and precast increased by 14.2%. Demand was particularly robust for bulk cement in mining and social works, as well as bagged cement for self-construction. The company successfully leveraged these volume gains alongside price increases to expand competitive PTA margins by 7 percentage points to 34.9%.
• Strategic Initiatives and Innovation: Pacasmayo is expanding its high-margin specialized construction solutions, specifically prefabricated concrete sheet piles, which allow for faster delivery and precision. A key achievement was securing an additional 4.4 kilometers of concrete sheet pile supply for the ongoing Ciudad River defense project.
• Human Capital and Social Impact: The company’s digital ecosystem supports over 5,000 foremen in Northern Peru with benefits and learning opportunities, contributing to a 157% growth in accumulation. Pacasmayo ranked ninth nationwide in the Merco ranking, maintaining leadership in the cement sector for 11 years. Community initiatives, including the 'Juntos contra la Anemia' program, reduced anemia prevalence in Elías O'Flynn from 17% to 9%.

• Cement (Salmon/Salmon revenues): Revenue reached 571.6 million soles, representing a 21.3% year-over-year increase. This segment drove the majority of the company's top-line growth, supported by higher volumes in bulk cement for mining and social works. Gross margin expanded by 2.5 percentage points, aided by lower electricity rates from new long-term energy contracts and improved cost efficiency.
• Concrete Pavement and Mortar: Revenue decreased by 19.7% to 65.6 million soles due to reduced volumes following the completion of major projects (Chana Quarta, Motupe, and Piura Airport). Despite lower sales, gross margins expanded significantly by 21 percentage points to 19.8%, driven by a disciplined commercial strategy focused on profitability and cost savings post-project completion.
• Precast: Revenue rose 23.1% to 11.3 million soles, fueled by stronger demand for concrete pavements in public and private projects in regions such as Piura, Trujillo, and Chiclayo. Cross-margin expanded by 5.1 percentage points to 16.1%, reflecting higher self-volume and lower costs.

• Volume Growth Outlook: Management expects approximately 4% volume growth in cement demand heading into 2027.
• Conditional Factors: This guidance is heavily contingent on the strength and impact of the El Niño weather phenomenon, which could influence regional construction activity and demand.

• Weather Dependency: Operational performance and future demand are subject to the potential negative impacts of the El Niño phenomenon on the Peruvian region.
• M&A Integration Risks: While Holcim has acquired a neutrality position, synergies are in early stages. There is no current financial reflection of procurement or operational synergies, indicating execution risk in realizing expected value from the partnership.
• Regulatory and Transaction Uncertainty: A tender offer is underway until November 20th, moving according to regulators. Implications for minority shareholders and potential delisting remain uncertain pending regulatory approval and final steps.

Q: Gabriel Perez (Credicorp Capital) asked about the sustainability of the current cement demand recovery heading into 2027 and the potential impact of El Niño on regional demand. / A: CEO Humberto Nadal stated that while the company anticipates approximately 4% volume growth next year, this projection is entirely dependent on the severity and impact of the El Niño weather phenomenon. He emphasized that the outlook remains conditional on how this climatic event affects construction activities in the region.

Q: Francisco Suarez (Scotiabank) inquired whether any synergies between Pacasmayo and Holcim have begun to reflect in the financial results, specifically regarding procurement savings or operational integration. / A: Nadal confirmed that the relationship is still in very early stages, and there has been no tangible reflection of synergies in the current quarter's results. He clarified that potential savings from procurement or other integrated operations have not yet materialized in the financial data.

Q: An anonymous caller asked if Pacasmayo plans to announce dividends in the near future, noting previous announcements in October, and inquired about potential share buybacks. / A: Nadal responded that the Board of Directors has not adopted any decision regarding dividend distribution as of the call date. Regarding capital returns through equity reduction, he explicitly stated there are no plans for a share buyback at this point.

Q: Mario Velasquez (Luan) requested details on the status of the recent tender offer launched by Holcim, asking about next steps, implications for minority shareholders, and the possibility of delisting. / A: Nadal explained that Holcim holds a neutrality position in Pacasmayo and that the tender offer, launched last week, will run until November 20th. He noted that all steps are proceeding according to regulatory guidelines but declined to speculate on specific outcomes for minority shareholders or delisting possibilities.