NYSE:CPAC Cementos Pacasmayo S.A.A. Q1 2023 Earnings Report $5.58 -0.07 (-1.15%) As of 10:54 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast Cementos Pacasmayo S.A.A. EPS ResultsActual EPS$0.13Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ACementos Pacasmayo S.A.A. Revenue ResultsActual Revenue$125.92 millionExpected Revenue$139.45 millionBeat/MissMissed by -$13.53 millionYoY Revenue GrowthN/ACementos Pacasmayo S.A.A. Announcement DetailsQuarterQ1 2023Date4/26/2023TimeN/AConference Call DateThursday, April 27, 2023Conference Call Time11:00AM ETUpcoming EarningsCementos Pacasmayo S.A.A.'s Q1 2025 earnings is scheduled for Monday, May 5, 2025, with a conference call scheduled on Tuesday, April 29, 2025 at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Cementos Pacasmayo S.A.A. Q1 2023 Earnings Call TranscriptProvided by QuartrApril 27, 2023 ShareLink copied to clipboard.There are 4 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the Cementos Pacasmayo First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Ms. Operator00:00:23Claudia Bustamante, Investor Relations. Claudia, you may begin. Speaker 100:00:29Thank you, Denny. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer and Mr. Manuel Ferreiro, our Chief Financial Officer. Speaker 100:00:38Mr. Nadal will begin our call with an overview of the quarter, focusing primarily on our strategic outlook for the short and medium term. Mr. Ferreiro will follow with additional commentary on our financial results. We'll then turn the call over to your questions. Speaker 100:00:51Please note that this call will include certain forward looking statements. These statements relate to expectations, beliefs, projections, trends and other matters that are not historical facts and are therefore subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company's regulatory filings. With that, I'd now like to turn the call over to Mr. Humberto Nadal. Speaker 200:01:16Thank you, Claudia. Welcome everyone to today's conference call and thank you for joining us today. This quarter we had to face the challenge of inclement weather. As you probably already know, during March our country and specifically the northern region were deeply affected by a cyclone. This is an extremely rare occurrence that left many without a home or livelihood. Speaker 200:01:41So I would first like to take a moment to extend our deepest sense of solidarity with them and the families and to promise that as a company we will always continue helping as much as possible. Saicco and Yaku mainly affected the regions of Tumbez, Piura, Lamborieque and Liberdad. This phenomenon and the rainy season in general have less so far economic losses estimated at $4,000,000,000 Our sales this quarter were understandably affected by this event temporarily mainly during March when sales volume decreased by 23% as compared to the same period of 2022. Nonetheless, due to proper cost management and the decrease in the use of imported clinker, we were still able to increase our EBITDA margin by almost 1% point reaching 25.1%. I would like now to focus first on our capacity to respond like in other occasions to a crisis like this and then to focus on the future and how we can all make sure that we are better prepared for the next time this happens. Speaker 200:02:49As soon as we realize that the amount of rain especially in the Pacasmayo area which is not usually as vulnerable to flooding was going to have severe consequences, we promptly, I would say, immediately deployed our crisis management plan. This plan addresses the effects of SkyMatch related events through a strategy that involves immediate action in coordination with local authorities and neighborhood councils in our areas of influence. The first step in this plan is to pump the water out and we used our mixer trucks to store this water. Once everything was dry, we had to remove any solid waste to clear the waste or proper transit and to prevent diseases. Only then and let me stress this, only then could we provide clean drinking water. Speaker 200:03:36In many areas of our country, the sewage system is still undeveloped and when floods and landslides occurred, there's a possibility of collapse, posing a very alarming safety threat. We can say we successfully focused on preventing this from happening and couldn't move on to sanitizing the streets. Luckily, our experience during COVID was extremely valuable here as we are already sanitized streets using our own mix of trucks. We believe that our crisis plan worked and we were able to mitigate and reduce the risks in an effective manner. Now that the immediate crisis has for the time being subsided, we need to focus on prevention straightaway, so that we can be certain that when another weather related disaster comes, we are better prepared than this time. Speaker 200:04:25Although there has been much ill talk about the inefficiency of the reconstruction plant called Recotecao Con Cambios, the reality is really different. And the reality is that part of this plan has in fact been successfully executed, although much lower than initially proposed. The reconstruction plan included hospitals, schools and preventive works such as dams, river defenses and spray systems. The schools and hospitals have been built and were very needed. Now the preventive works are pending. Speaker 200:04:59Given the current state of destruction in the North and considering there is a possibility that El Nino may happen soon, these preventive works have to be prioritized. Pacasmayo has plenty of evidence to support that building with the proper materials and designing correctly makes a world of difference in terms of resilience. We have designed and built using the infrastructure for taxes scheme, part of the Avenir Bayover, the Avenir Santercero and the Avenir Jose Llama, all of them in These roads were built using concrete and designed after an extremely careful analysis of the type of salt and in order to endure the potential natural disaster including proper drainage. The results speak of themselves. These results have endured the recent heavy rains without any important damage and much better than any other alternative. Speaker 200:05:53We need to insist on the importance of building resilient infrastructure since extreme climate patterns will continue and we need to make sure that as a country we are prepared to face it. This has been indeed a different quarter. I will now turn the call over to Anuel to go into more detailed financial analysis. Speaker 300:06:19Thank you, Humberto. Good morning, everyone. As Humberto mentioned, our Q1 2023 revenues were affected by the temporary decrease in demand, reaching PEN 480,000,000, an 8.6% decrease when compared to the same period of last year. The gross profit also decreased, but significantly less, achieving PEN160.6 million, a 2.7 percent decrease when compared to the same period of last year, mainly affected by decreased sales, partially offset by lower costs from decreased use of imported clinker. Consolidated EBITDA was $120,700,000 this quarter, a 5.3% decrease when compared to the Q1 of 2022. Speaker 300:07:12However, it is important to note that EBITDA margin was 25.1%, a 0.8 percentage point increase when compared to the Q1 of 2020 2. Turning to operating expenses. Administrative expenses for the Q1 of 2023 increased 8.1% when compared to the Q1 of 2022, mainly due to an increase in personnel expenses as a result of increase in workers' profit sharing and an increase in salaries in line with inflation. Selling expenses during this quarter increased slightly only 2.9% when compared to the same period of last year, mainly due to expenses related to the development of digital platforms. Moving on to a different segment, sales of cement decreased only 4.2% this quarter when compared to the same period of last year, mainly due to the temporary decrease in demand because of the flooding and landslides caused by cyclone yaku and intense rainfall afterwards. Speaker 300:08:24However, gross margin increased 1.1 percentage point in the Q1 of 2023 when compared to the Q1 of 2022, mainly due to reduction in the use of imported clinker. During this quarter, concrete, pavement and mortar sales decreased 22.3%, mainly due to a significant slowdown in sales volume for private and public works, which deepened due to the interruption in construction during the heavy rains. Gross margin decreased 1.6 percentage points in the Q1 of 2022 when compared to the same period of last year, mainly due to the lower dilution of fixed costs because of the decreased sales volume. Sales of free cash materials during the Q1 of 2023 also decreased affected by the rain. The decrease in sales was 30.9% when compared with the same period last year and gross margin was negative, mainly due to low dilution of fixed costs as heavy precast demand was stalled for the lack of larger projects and the effect of flooding during the quarter. Speaker 300:09:37Net profit decreased 4.8% this quarter when compared to the same period of last year, mainly due to temporary decrease in sales. In terms of debt, our net debt to EBITDA ratio was 3.2 times, which is a level we expect to sustain. It is important to mention that this February, we paid the remaining $132,000,000 of our 10 year international bond without incurring any additional cost due to the exchange rate effect. As I mentioned before as we mentioned before, we had already obtained a loan to pay for this bond. To summarize, this quarter results show our ability to manage cost and seek for profitability when faced with challenge on the demand side. Speaker 300:10:29We are confident that we will continue delivering positive results during Speaker 200:10:34the rest of the year. Speaker 300:10:38Thank you, and please, Humberto. Now we're open to questions. Operator00:10:44Thank you, Humberto. At this time, we're conducting our question and answer session. Okay. Claudia, I don't have any questions on the phone lines. Do you have any via the webcast? Speaker 100:11:23Yes, we do. The first question is about the club deal and the grace period. Would we estimate to start paying the interest on those first disbursements from the previous years? And when would we start paying interest on the last disbursement in February of this year? Speaker 300:11:43Yes. Thank you, Claudia. The cash deal will start paying the first coupon on August of this year. It's approximately PEN40 1,000,000 and it's going to be due 5 years because this is a loan, a 7 year loan with a grace period of 2 years. Speaker 100:12:07Question is, I'd like to know what could we expect in terms of cement volumes over the next quarter, given the already mentioned heavy rains in the region as well as the expected El Nino to come ahead. Do you guys plan to revise your volume estimates for 2023? Speaker 200:12:23[SPEAKER SEBASTIEN DE MONTESSUS:] Well, I think it's a very good question. We are behind the volumes this quarter because of the weather. As we speak, the impact of the weather is now very real. We're starting to recover. And there are 3 things that are very important. Speaker 200:12:39Number 1, the government put a special fund to rebuild the north. Number 2, as you all know regional authorities were elected and they were started working in January this year and they were very new and they've been focused on the weather these last 3 months. So the learning curve should be now much, much faster. And also all the programs of the agenda which are basically mortgage programs have been revised and rebooted by the government. So we are, I would say, very optimistic that starting around probably June, volume should recover very, very quickly. Speaker 200:13:15And we'll see in time how much can we recover of the volume we didn't perform in the Q1. Speaker 100:13:25What are you expecting in terms of market dynamics for the following months in terms of self construction and reconstruction initiatives related to the cyclones that is currently affecting the North? Speaker 200:13:35[SPEAKER MARTIN PEREZ DE SOLAY:] Well, I think self construction has always been the core of our business and that will remain the case. And like I mentioned in the question before, I think the construction plants are heavy on the way. The government has testing a very substantial amount of resources and hopefully they'll be able to deploy this in the coming weeks and even months because they all are concerned that some kind of phenomenon may come in the coming years and we need to be prepared. Speaker 100:14:04The next question is what types of actions are you currently evaluating to mitigate any impact of a strong to extraordinary El Nino? Speaker 200:14:13We've been I think what Jako showed is that we are very prepared. I mean our plants suffered no damage at all. Our logistics change was able to be very resilient. So really who needs to be prepared is not Pacasmayo. We need to be prepared is a region. Speaker 200:14:30And like I mentioned in the questions before, I think both the regional and the national governments are as we speak working intensively to be able to have as much preparation as we can possibly have. Speaker 100:14:44The next question, which percentage of total sales are geographically located in the affected regions, so Tumbez, Pura, Lambayeque and La Libertad. Speaker 200:14:5690% of the U. S. GAIL Lalibertad. If you were to exclude La Libertad and focusing what's in the remaining of the last 2 weeks, which is Tumebes Pure and the rest will be around and by April, it will be around 40%. Speaker 100:15:16How much imported clinker Speaker 200:15:20how much Speaker 100:15:21did the use of imported clinker decrease compared to the Q1 of 2022 and to the Q4 of 2022? And what was the impact on margins? [SPEAKER MARTIN Speaker 300:15:35PEREZ DE SOLAY:] Yes. The total impact the total clinker that we've used in the Q1 of 2023 has been very, very little, around 3,000 tons of clinker. Compared with the same period of last year, it was around 100,000 tons. So that affected over cost last year of around PLN 23,000,000. Speaker 100:16:01Good morning and thanks for the presentation. Could you share guidance regarding sales and EBITDA for this year 2023? Besides this, in an El Nino high impact in the country, are you expecting a sales construction decrease? [SPEAKER SEBASTIEN DE MONTESSUS:] Speaker 200:16:18I think we're very optimistic that, like I said, if we're going to recover, we will see by the end of the second quarter. But I would say that by the end of the second quarter, we may be very close to the EBITDA that we performed last year, even though the sales of the Q1 have been very bad. But we are very optimistic on a quick recovery. Speaker 100:16:41The next one is on pricing. How much was the average increase in prices year over year of cement in this Speaker 200:16:50quarter? Last year, we were very strong in price. We were able to recover profitability through price. This year, these 1st 3 months, as you may understand, I mean, due to what was going on in terms of the weather and everything, we made no price adjustments, and we don't intend to do any in the coming months because we think that we did enough on the last year. Speaker 100:17:16The next question is in the event of a long El Nino, what are the possible risks that you can face in the following months regarding supply chain purchases, inventory and transportation costs? Speaker 200:17:27In terms of supply chain inventories, I mean, as you know, we are very conservative and we usually have 8 to 9 months of limestone, of seashells, of coal. So from that time, we are pretty cautious. We always been in terms of interruption of the logistics change, it would have to be more concerning how to get to the market. That is unpredictable. Even though YAK was very strong, we stopped maybe a couple of days, 2, 3 days and then we came back. Speaker 200:17:58The fact that we have 3 plants 2 in the north, the fact that our distribution channel is spread all over the north really helps to cover whichever area cannot be reached by a logistic chain can be supplied from somewhere else. Speaker 100:18:14And then finally, as you showed in the first slides of the presentation, the advantage of building with concrete, do you see a higher growth rate of sales of concrete as a preparation for El Nino? Speaker 200:18:27Yes. The answer is a definite yes, capital letters, because authorities have seen the resilience of concrete besides compared to asphalt. So I think what the government is trying to do now in terms of reconstruction will be done mostly with concrete. Speaker 100:18:43I think those are all of the questions. So I'll now turn it over to Humberto for closing remarks. Speaker 200:18:48Thank you, Claudia. For the past couple of years, it seems that we have been faced with a whole spectrum of challenges. First, a global pandemic, then the constantly changing political environment in Peru and instability disposes and now extreme weather patterns that are very harmful to our countries already limited infrastructure. But we are taking these challenges as we should as learning opportunities and we can now adapt and react faster, make us feel more confident that we are well prepared to face the future. This is a crucial moment for our country. Speaker 200:19:19Let us take the recent flooding as a sign and opportunity to actually push for all of the infrastructure needs that have been in planning for many years. If anything besides resilience or after resilience comes extreme positive outlook for our country and that's where we are. We have been more than 65 years pending in Peru pending in the north of the country. And I think this if you ask me are the most optimistic moments of the last 10 years. Thank you everybody for your remaining interest in our company. Speaker 200:19:53As always, we remain at your disposal. Thank you. Operator00:19:57Thank you very much everybody. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCementos Pacasmayo S.A.A. Q1 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Cementos Pacasmayo S.A.A. Earnings HeadlinesCementos Pacasmayo S.A.A. American Depositary Shares (Each representing five Common Shares) (CPAC)April 11, 2025 | nasdaq.comCementos Pacasmayo May Offer An Adjusted 13% Earnings Yield, But Is Fairly ValuedFebruary 18, 2025 | seekingalpha.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.April 22, 2025 | Paradigm Press (Ad)Cementos Pacasmayo price target lowered to $6 from $6.50 at JPMorganFebruary 17, 2025 | markets.businessinsider.comCEMENTOS PACASMAYO S.A.A. R.U.C. N° 20419387658: Notice of Mandatory Annual Shareholders' MeetingFebruary 14, 2025 | finance.yahoo.comCementos Pacasmayo projects sustained EBITDA margins at 27% in 2025 amid volume growthFebruary 14, 2025 | msn.comSee More Cementos Pacasmayo S.A.A. Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Cementos Pacasmayo S.A.A.? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Cementos Pacasmayo S.A.A. and other key companies, straight to your email. Email Address About Cementos Pacasmayo S.A.A.Cementos Pacasmayo S.A.A. (NYSE:CPAC), a cement company, produces, distributes, and sells cement and cement-related materials in Peru. It operates through three segments: Cement, Concrete, Mortar and Precast; Quicklime; and Sales of Construction Supplies. The company's cement and concrete products are used in residential and commercial construction, and civil engineering; ready-mix concrete used in construction sites; concrete precast, such as paving units or paver stones for pedestrian walkways, as well as other bricks for partition walls and concrete precast for structural and non-structural uses; and cement-based products. It also produces and distributes quicklime for use in steel, food, fishing, and chemical industries. In addition, the company sells and distributes other construction materials manufactured by third parties, such as steel rebar, plastic pipes, and electrical wires. It offers its products directly to other retailers, private construction companies, and government entities through a network of independent retailers and hardware stores. The company was incorporated in 1949 and is headquartered in Lima, Peru. Cementos Pacasmayo S.A.A. is a subsidiary of Inversiones ASPI S.A.View Cementos Pacasmayo S.A.A. 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There are 4 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the Cementos Pacasmayo First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Ms. Operator00:00:23Claudia Bustamante, Investor Relations. Claudia, you may begin. Speaker 100:00:29Thank you, Denny. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer and Mr. Manuel Ferreiro, our Chief Financial Officer. Speaker 100:00:38Mr. Nadal will begin our call with an overview of the quarter, focusing primarily on our strategic outlook for the short and medium term. Mr. Ferreiro will follow with additional commentary on our financial results. We'll then turn the call over to your questions. Speaker 100:00:51Please note that this call will include certain forward looking statements. These statements relate to expectations, beliefs, projections, trends and other matters that are not historical facts and are therefore subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company's regulatory filings. With that, I'd now like to turn the call over to Mr. Humberto Nadal. Speaker 200:01:16Thank you, Claudia. Welcome everyone to today's conference call and thank you for joining us today. This quarter we had to face the challenge of inclement weather. As you probably already know, during March our country and specifically the northern region were deeply affected by a cyclone. This is an extremely rare occurrence that left many without a home or livelihood. Speaker 200:01:41So I would first like to take a moment to extend our deepest sense of solidarity with them and the families and to promise that as a company we will always continue helping as much as possible. Saicco and Yaku mainly affected the regions of Tumbez, Piura, Lamborieque and Liberdad. This phenomenon and the rainy season in general have less so far economic losses estimated at $4,000,000,000 Our sales this quarter were understandably affected by this event temporarily mainly during March when sales volume decreased by 23% as compared to the same period of 2022. Nonetheless, due to proper cost management and the decrease in the use of imported clinker, we were still able to increase our EBITDA margin by almost 1% point reaching 25.1%. I would like now to focus first on our capacity to respond like in other occasions to a crisis like this and then to focus on the future and how we can all make sure that we are better prepared for the next time this happens. Speaker 200:02:49As soon as we realize that the amount of rain especially in the Pacasmayo area which is not usually as vulnerable to flooding was going to have severe consequences, we promptly, I would say, immediately deployed our crisis management plan. This plan addresses the effects of SkyMatch related events through a strategy that involves immediate action in coordination with local authorities and neighborhood councils in our areas of influence. The first step in this plan is to pump the water out and we used our mixer trucks to store this water. Once everything was dry, we had to remove any solid waste to clear the waste or proper transit and to prevent diseases. Only then and let me stress this, only then could we provide clean drinking water. Speaker 200:03:36In many areas of our country, the sewage system is still undeveloped and when floods and landslides occurred, there's a possibility of collapse, posing a very alarming safety threat. We can say we successfully focused on preventing this from happening and couldn't move on to sanitizing the streets. Luckily, our experience during COVID was extremely valuable here as we are already sanitized streets using our own mix of trucks. We believe that our crisis plan worked and we were able to mitigate and reduce the risks in an effective manner. Now that the immediate crisis has for the time being subsided, we need to focus on prevention straightaway, so that we can be certain that when another weather related disaster comes, we are better prepared than this time. Speaker 200:04:25Although there has been much ill talk about the inefficiency of the reconstruction plant called Recotecao Con Cambios, the reality is really different. And the reality is that part of this plan has in fact been successfully executed, although much lower than initially proposed. The reconstruction plan included hospitals, schools and preventive works such as dams, river defenses and spray systems. The schools and hospitals have been built and were very needed. Now the preventive works are pending. Speaker 200:04:59Given the current state of destruction in the North and considering there is a possibility that El Nino may happen soon, these preventive works have to be prioritized. Pacasmayo has plenty of evidence to support that building with the proper materials and designing correctly makes a world of difference in terms of resilience. We have designed and built using the infrastructure for taxes scheme, part of the Avenir Bayover, the Avenir Santercero and the Avenir Jose Llama, all of them in These roads were built using concrete and designed after an extremely careful analysis of the type of salt and in order to endure the potential natural disaster including proper drainage. The results speak of themselves. These results have endured the recent heavy rains without any important damage and much better than any other alternative. Speaker 200:05:53We need to insist on the importance of building resilient infrastructure since extreme climate patterns will continue and we need to make sure that as a country we are prepared to face it. This has been indeed a different quarter. I will now turn the call over to Anuel to go into more detailed financial analysis. Speaker 300:06:19Thank you, Humberto. Good morning, everyone. As Humberto mentioned, our Q1 2023 revenues were affected by the temporary decrease in demand, reaching PEN 480,000,000, an 8.6% decrease when compared to the same period of last year. The gross profit also decreased, but significantly less, achieving PEN160.6 million, a 2.7 percent decrease when compared to the same period of last year, mainly affected by decreased sales, partially offset by lower costs from decreased use of imported clinker. Consolidated EBITDA was $120,700,000 this quarter, a 5.3% decrease when compared to the Q1 of 2022. Speaker 300:07:12However, it is important to note that EBITDA margin was 25.1%, a 0.8 percentage point increase when compared to the Q1 of 2020 2. Turning to operating expenses. Administrative expenses for the Q1 of 2023 increased 8.1% when compared to the Q1 of 2022, mainly due to an increase in personnel expenses as a result of increase in workers' profit sharing and an increase in salaries in line with inflation. Selling expenses during this quarter increased slightly only 2.9% when compared to the same period of last year, mainly due to expenses related to the development of digital platforms. Moving on to a different segment, sales of cement decreased only 4.2% this quarter when compared to the same period of last year, mainly due to the temporary decrease in demand because of the flooding and landslides caused by cyclone yaku and intense rainfall afterwards. Speaker 300:08:24However, gross margin increased 1.1 percentage point in the Q1 of 2023 when compared to the Q1 of 2022, mainly due to reduction in the use of imported clinker. During this quarter, concrete, pavement and mortar sales decreased 22.3%, mainly due to a significant slowdown in sales volume for private and public works, which deepened due to the interruption in construction during the heavy rains. Gross margin decreased 1.6 percentage points in the Q1 of 2022 when compared to the same period of last year, mainly due to the lower dilution of fixed costs because of the decreased sales volume. Sales of free cash materials during the Q1 of 2023 also decreased affected by the rain. The decrease in sales was 30.9% when compared with the same period last year and gross margin was negative, mainly due to low dilution of fixed costs as heavy precast demand was stalled for the lack of larger projects and the effect of flooding during the quarter. Speaker 300:09:37Net profit decreased 4.8% this quarter when compared to the same period of last year, mainly due to temporary decrease in sales. In terms of debt, our net debt to EBITDA ratio was 3.2 times, which is a level we expect to sustain. It is important to mention that this February, we paid the remaining $132,000,000 of our 10 year international bond without incurring any additional cost due to the exchange rate effect. As I mentioned before as we mentioned before, we had already obtained a loan to pay for this bond. To summarize, this quarter results show our ability to manage cost and seek for profitability when faced with challenge on the demand side. Speaker 300:10:29We are confident that we will continue delivering positive results during Speaker 200:10:34the rest of the year. Speaker 300:10:38Thank you, and please, Humberto. Now we're open to questions. Operator00:10:44Thank you, Humberto. At this time, we're conducting our question and answer session. Okay. Claudia, I don't have any questions on the phone lines. Do you have any via the webcast? Speaker 100:11:23Yes, we do. The first question is about the club deal and the grace period. Would we estimate to start paying the interest on those first disbursements from the previous years? And when would we start paying interest on the last disbursement in February of this year? Speaker 300:11:43Yes. Thank you, Claudia. The cash deal will start paying the first coupon on August of this year. It's approximately PEN40 1,000,000 and it's going to be due 5 years because this is a loan, a 7 year loan with a grace period of 2 years. Speaker 100:12:07Question is, I'd like to know what could we expect in terms of cement volumes over the next quarter, given the already mentioned heavy rains in the region as well as the expected El Nino to come ahead. Do you guys plan to revise your volume estimates for 2023? Speaker 200:12:23[SPEAKER SEBASTIEN DE MONTESSUS:] Well, I think it's a very good question. We are behind the volumes this quarter because of the weather. As we speak, the impact of the weather is now very real. We're starting to recover. And there are 3 things that are very important. Speaker 200:12:39Number 1, the government put a special fund to rebuild the north. Number 2, as you all know regional authorities were elected and they were started working in January this year and they were very new and they've been focused on the weather these last 3 months. So the learning curve should be now much, much faster. And also all the programs of the agenda which are basically mortgage programs have been revised and rebooted by the government. So we are, I would say, very optimistic that starting around probably June, volume should recover very, very quickly. Speaker 200:13:15And we'll see in time how much can we recover of the volume we didn't perform in the Q1. Speaker 100:13:25What are you expecting in terms of market dynamics for the following months in terms of self construction and reconstruction initiatives related to the cyclones that is currently affecting the North? Speaker 200:13:35[SPEAKER MARTIN PEREZ DE SOLAY:] Well, I think self construction has always been the core of our business and that will remain the case. And like I mentioned in the question before, I think the construction plants are heavy on the way. The government has testing a very substantial amount of resources and hopefully they'll be able to deploy this in the coming weeks and even months because they all are concerned that some kind of phenomenon may come in the coming years and we need to be prepared. Speaker 100:14:04The next question is what types of actions are you currently evaluating to mitigate any impact of a strong to extraordinary El Nino? Speaker 200:14:13We've been I think what Jako showed is that we are very prepared. I mean our plants suffered no damage at all. Our logistics change was able to be very resilient. So really who needs to be prepared is not Pacasmayo. We need to be prepared is a region. Speaker 200:14:30And like I mentioned in the questions before, I think both the regional and the national governments are as we speak working intensively to be able to have as much preparation as we can possibly have. Speaker 100:14:44The next question, which percentage of total sales are geographically located in the affected regions, so Tumbez, Pura, Lambayeque and La Libertad. Speaker 200:14:5690% of the U. S. GAIL Lalibertad. If you were to exclude La Libertad and focusing what's in the remaining of the last 2 weeks, which is Tumebes Pure and the rest will be around and by April, it will be around 40%. Speaker 100:15:16How much imported clinker Speaker 200:15:20how much Speaker 100:15:21did the use of imported clinker decrease compared to the Q1 of 2022 and to the Q4 of 2022? And what was the impact on margins? [SPEAKER MARTIN Speaker 300:15:35PEREZ DE SOLAY:] Yes. The total impact the total clinker that we've used in the Q1 of 2023 has been very, very little, around 3,000 tons of clinker. Compared with the same period of last year, it was around 100,000 tons. So that affected over cost last year of around PLN 23,000,000. Speaker 100:16:01Good morning and thanks for the presentation. Could you share guidance regarding sales and EBITDA for this year 2023? Besides this, in an El Nino high impact in the country, are you expecting a sales construction decrease? [SPEAKER SEBASTIEN DE MONTESSUS:] Speaker 200:16:18I think we're very optimistic that, like I said, if we're going to recover, we will see by the end of the second quarter. But I would say that by the end of the second quarter, we may be very close to the EBITDA that we performed last year, even though the sales of the Q1 have been very bad. But we are very optimistic on a quick recovery. Speaker 100:16:41The next one is on pricing. How much was the average increase in prices year over year of cement in this Speaker 200:16:50quarter? Last year, we were very strong in price. We were able to recover profitability through price. This year, these 1st 3 months, as you may understand, I mean, due to what was going on in terms of the weather and everything, we made no price adjustments, and we don't intend to do any in the coming months because we think that we did enough on the last year. Speaker 100:17:16The next question is in the event of a long El Nino, what are the possible risks that you can face in the following months regarding supply chain purchases, inventory and transportation costs? Speaker 200:17:27In terms of supply chain inventories, I mean, as you know, we are very conservative and we usually have 8 to 9 months of limestone, of seashells, of coal. So from that time, we are pretty cautious. We always been in terms of interruption of the logistics change, it would have to be more concerning how to get to the market. That is unpredictable. Even though YAK was very strong, we stopped maybe a couple of days, 2, 3 days and then we came back. Speaker 200:17:58The fact that we have 3 plants 2 in the north, the fact that our distribution channel is spread all over the north really helps to cover whichever area cannot be reached by a logistic chain can be supplied from somewhere else. Speaker 100:18:14And then finally, as you showed in the first slides of the presentation, the advantage of building with concrete, do you see a higher growth rate of sales of concrete as a preparation for El Nino? Speaker 200:18:27Yes. The answer is a definite yes, capital letters, because authorities have seen the resilience of concrete besides compared to asphalt. So I think what the government is trying to do now in terms of reconstruction will be done mostly with concrete. Speaker 100:18:43I think those are all of the questions. So I'll now turn it over to Humberto for closing remarks. Speaker 200:18:48Thank you, Claudia. For the past couple of years, it seems that we have been faced with a whole spectrum of challenges. First, a global pandemic, then the constantly changing political environment in Peru and instability disposes and now extreme weather patterns that are very harmful to our countries already limited infrastructure. But we are taking these challenges as we should as learning opportunities and we can now adapt and react faster, make us feel more confident that we are well prepared to face the future. This is a crucial moment for our country. Speaker 200:19:19Let us take the recent flooding as a sign and opportunity to actually push for all of the infrastructure needs that have been in planning for many years. If anything besides resilience or after resilience comes extreme positive outlook for our country and that's where we are. We have been more than 65 years pending in Peru pending in the north of the country. And I think this if you ask me are the most optimistic moments of the last 10 years. Thank you everybody for your remaining interest in our company. Speaker 200:19:53As always, we remain at your disposal. Thank you. Operator00:19:57Thank you very much everybody. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.Read morePowered by