NYSE:CPAC Cementos Pacasmayo S.A.A. Q4 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$0.14Consensus EPS $0.14Beat/MissMet ExpectationsOne Year Ago EPSN/ACementos Pacasmayo S.A.A. Revenue ResultsActual Revenue$135.22 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ACementos Pacasmayo S.A.A. Announcement DetailsQuarterQ4 2023Date2/15/2024TimeN/AConference Call DateThursday, February 15, 2024Conference 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. Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 15, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Good day, ladies and gentlemen. Welcome to Pacasmayo's 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode, and please note that this call is being recorded. At the conclusion of our prepared remarks, we will conduct a question and answer session. I would now like to introduce your host for today's call, Mrs. Operator00:00:20Claudia Bustamante, Sustainability and Investor Relations Manager. Mrs. Bustamante, you may begin. Speaker 100:00:28Thank you, Tim. 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 100:00:39Mr. Nadal will begin our call with an overview of the quarter, focusing primarily on our strategic outlook for the short and medium term. Mr. Ferreros will then follow with additional commentary on our financial results. We'll then turn the call over to your questions. Speaker 100:00:55Please 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 may 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 Naran. Speaker 200:01:22Thank you, Claudia. Welcome, everyone, to our quarterly results conference call, and thank you so much for joining us today. This quarter, we continue to focus on our strategy, which led us to deliver outstanding results in terms of profitability. We reached a gross profit margin of 39.4%, almost 9 percentage points higher than the same quarter of last year. This significant increase in margin was mainly due to the lower production cost of our new which also allowed us to replace imported clinker with our own clinker as well as to the decrease in the cost of coal. Speaker 200:02:00Considering that we now have this additional capacity that is both efficient and more environmentally friendly, we decided to make an impairment to our vertical kilns. This non cash effect affected EBITDA, but our adjusted EBITDA increased 29% year over year this quarter and adjusted EBITDA margin reached 30.5%. This outstanding and I want to stress, outstanding quarter results have allowed us to reach a record adjusted EBITDA of $518,300,000 in 2023, the highest in all the history of Pacasmayo. We firmly believe these are remarkable achievements, especially considering that in terms of demand, it was a very challenging year as well as the social conflict and Saicco and Yacu that affected our sales in the first half of the year. We are convinced that efficiencies achieved will be sustainable over time, making for a very promising 2024 as volumes should continue the positive strength we started seeing in the second half of last year. Speaker 200:03:01In terms of our long term strategy, I'd like to take this opportunity to look back on our digital strategy and how we have progressed over time. If you look at the digitalization of our commercial strategy, we have now migrated completely from a traditional model to a fully digital one. For self construction segment, we continue to enhance Mundo Experto, an ecosystem of digital solutions that targets the needs of Foreman, self builders and individual consumers. We also have Consturi Xperto, a digital platform for Foreman that provides them with the daily tools and training to help them improve professionally. For hardware stores, we have Perdexperto, developed to help them grow their business, digitalize their orders and get training on topics linked to their main needs. Speaker 200:03:47For our concrete clients, we have PACCARS Pro, a platform that provides comprehensive solutions for each project, including online scheduling and real time tracking of the orders. This year, we are focused on improving our service to the concrete segment, adapting concrete segment, adapting it to the unique needs of each client, creating new tools to establish different prices according to what each client requires. Finally, we know that digitalization is needed not only for commercialization, but also to enhance internal processes. This is how we are taking the steps needed to become a fully data driven organization. We have created a data and analytics committee to prioritize our sponsor initiatives and create the 1st agile unit in Pacasmayo. Speaker 200:04:32We are also in the process of designing and making available a corporate data ecosystem and implementing solutions that generate value for our business. We are convinced that these tools and surely more to come in the future along IA will be key to the success of our business in the upcoming years. I would like now to briefly, but not less, very importantly, mention an important milestone for IU, our solution aimed at families that need help financing the construction needs. Through an integrated purchasing method, people are able to define a building project and buy the materials that they need, they deliver on a monthly basis at their own pace until they have all of the materials needed to carry out their chosen project. In December, as they consistently making these payments, one of our clients was able to build his new roof. Speaker 200:05:24We are very proud, extremely proud of his achievement and we'll continue to promote IU so our more families can build a safe home. Finally, I would like to highlight our continued and renovated commitment and belief in our country. Despite the instability and extremely complex political scenario, we have been immersed in since 2020, we decided to bet on the future growth of Peru, as we have been doing for over 65 years and invested around $85,000,000 to optimize our clinker capacity and $403,000,000 to Rostoma Road in Piura to improve connectivity in the event of heavy rains. We firmly believe that our country holds great potential and thereby standing by in the good times and bad times, we will see it reach the potential in the near future. I will now turn the call over to Manuel to get into more detailed financial analysis. Speaker 300:06:21Thank you, Humberto. Good morning, everyone. Our Q4 2023 revenues were $511,400,000 a 4.2 percentage decrease when compared to the same period of last year. Gross profit, however, increased 23.6 percent, achieving PEN 200,100,600,000 mainly due to lower costs as we discontinue the use of imported clinker now that our new kiln is fully operational, as well as lower cost of coal. Consolidated EBITDA decreased 1.2%, mainly due to the impairment of our vertical kilns, as Humberto mentioned before. Speaker 300:07:07But without this effect, the adjusted EBITDA was PEN156.1 million, 29% increase compared to the previous year, despite the decrease of revenues, mainly due to operational efficiencies and lower raw material costs mentioned before. For 2023, revenues decreased 7.8% when compared to the same period of 2022, mainly due to lower levels of public and private investments as well as the negative impact of Cyclone Yako during the Q1 of the year. However, gross profit increased 5.7% when compared to the previous year, mainly due to efficiencies achieved during the second half of the year as well as higher average prices. Adjusted EBITDA increased 4.9% and adjusted EBITDA margin increased 3.2 percentage points when compared to the same period of last year. Turning to operational expenses. Speaker 300:08:14Administrative expenses increased 3.8% this quarter compared to the Q4 of 2022 and a 3.1% in 2023 compared to the same period of last year, in line with inflation. Selling expenses increased 12.8% this quarter when compared to the Q4 of 2022, mainly due to an increase in advertising expenses as well and as expenses related to the advancement of our digital strategy. During 2023, selling expenses increased 2.1% when compared to the previous year. Moving on to the different segments, sales of cement decreased 7.3% in the Q4 of 2023 compared to Q4 of 2022 and 5.8% in 2023 compared to 2022, mainly due to the decreased demand from self construction segment as well as for private and public works. However, gross margin increased 11.7 percentage points during the Q4 of 2023 and a 5 percentage points during the whole year when compared to the Q4 of 2022 and 2020 sorry Q4 of 2022 and the whole year, respectively, mainly due to cost optimization as we reduced the consumption of imported clinker and replaced it with clinker produced in the new and much more efficient kiln in Pacasmayo as well as lower cost of raw material such as coal. Speaker 300:09:59During this quarter, we are glad to report that sales of concrete pavement at mortars continue their positive trend, increasing 34.3% when compared to the Q4 of 2022, mainly due to increased sales of payment for the Piura Airport. During 2023, sales of concrete, payment and mortar decreased 4% when compared to the same period of last year, mainly due to a decrease in public and private investment during the first half of the year. Gross margin decreased 1.8 percentage points in the Q4 of 2023 compared to the Q4 of 2022 and 4.1 percentage points in 2023 compared to 2022, mainly due to lower margin for larger infrastructure projects. Sales of precast materials also increased 19.8% compared to the Q4 of 2022, mainly due to increased public investment this quarter for the construction of related projects. Gross margin increased by 26.6 percentage points in the Q4 of 2023 and 10.7 percentage points in 2023 compared to the Q4 of 2022 and the whole year, respectively, as higher sales volumes allow us for dilution of fixed costs. Speaker 300:11:32The net profit increased decreased 7.7 percent this quarter when compared to the same quarter last year and a 4.5% in the whole year compared to last year, mainly due to the non cash effect of the impairment of our vertical kilns. However, if we do not consider this effect, net profit for the year would have been $194,700,000 a 10.1% increase when compared to the previous year, mainly due to operational efficiencies mentioned before. In terms of debt, our net debt to adjusted EBITDA ratio was 3x, which is a level we expect to sustain and progressively decrease as EBITDA increases since we currently do not plan to incur in additional debt. To summarize, this quarter results shows the continued benefit of focusing on cost management and operational efficiencies, preparing and improving demand environment. We are confident that we will continue delivering positive results during the following quarters. Speaker 300:12:55Please can we open now for questions? Operator00:13:00Yes, of course. Thank you. So we will now move to the question and answer section. So our first question comes from Fernando Romero from Abaco Capital. Your line is open. Operator00:13:24Please go ahead. Hi, Fernando, can you hear us? Perhaps we can move on to another question in the meantime. Fernando, are you there? Sorry, let's move on to another question quickly first and maybe we can get the question from Fernando later. Operator00:13:55So let's move on. We've got a question from Natalia Leao from JPMorgan. Please go ahead. Speaker 400:14:06Hi. Thanks for taking my question and congrats on the results. I was just I want to understand better the growth in gross margins. So you mentioned lower energy costs and the lower cost of production from the new kiln. Just how many percentage points came from lower energy cost and how many from the new kiln? Speaker 400:14:28Just to understand where can it go going forward? Speaker 300:14:32Yes. We can consider going forward. It's we expect the whole year, we should be around 28% EBITDA margin, basically because we're as we mentioned, the cost of the coal has gone extremely down from 1 year to the other. And also, we are not using any more imported tanker. So that should be if we compare it with EBITDA of last year that was around 25.5 average, we should have this year 2024 whole year around 28. Speaker 400:15:09Okay, great. Understood. And if I may have another question, I was just wondering how do you see volumes for 2024, the impact from El Nino, could they decrease even more this year or should we expect maybe flattish volumes? Speaker 200:15:24I think volumes will be between would be a moderate growth. I don't see them going down. We and Nino will not be happening in the North unless something dramatic occurs. But I mean the charges of an extreme Nino in the North are 0% right now according to authorities. So the Nino will not impact, and we have a lot of positive news in the north. Speaker 200:15:46The government agreement to develop Cytomotik with the Canadians has been signed, and I think that's going to be the way to go. So I would think that volumes, unlike the past 2 years, will grow according to Apollo, they talk about 4%. I don't know if I'll be that optimistic, but between 2% and 4% will be my guess. Speaker 400:16:05Great. Thank you so much. Speaker 200:16:06You're welcome. Operator00:16:12Okay. Thank you. So our next question, we have a text question from Jonel Coe from Seminario and he asks, regarding Pacasmayo's dividend policy, is there any limit to distribute previous year's retained earnings? Speaker 200:16:29Technically, there's no limit. I mean, we've been very consistent in our dividend policy over the last, I believe, 5 to 7 years. The philosophy behind that, I mean, first of all, it's not the CEO to decide, it's for the Board to decide and eventually for our shareholders meaning to ratify. But our idea is, I mean, we have no need for cash and we have in excess that we've given out in dividends. So if anything, the biggest limitation we have is the cash position of the company. Speaker 200:16:56But in terms of accumulated profits, there's no limitation. Operator00:17:03Great. Thank you. So we've got a question from Gerard Forte from AFP Integra. Hello. I have a few questions regarding the vertical kilns impairment for this quarter. Operator00:17:23Are you expecting more impairments in the Q1 2024? What's the impact of this impairment regarding the clinker capacity in Pacasmayo? In the MDA report, you said the total capacity in Pacasmayo plant was $1,800,000 below the $2,100,000 expected with the new Pacasmayo kilns. Why did you report the impairment inside the operating income? Since it's a nonrecurrent, non operating expense, it shouldn't impact the EBITDA numbers, same with donations, which are being considered as an operating expense? Operator00:17:55Thank you. Speaker 200:17:57Thank you for the question. I mean, we expect no further impairments. The vertical kilns now have been completely its value has been taken completely to CRO. And like I said, I mean, we talk about the capacity of Pacasmayo, we have taken away now you have to take away what the vertical kilns the 8 vertical kilns were supplying, and you have to add 600,000 tons of capacity that kiln number 4 came. Operator00:18:25Perfect. Thank you. So we have a voice question now from Kareli Medina from Intisaguro. Please go ahead. Hi, Kareli, can you hear us? Operator00:18:49Cadelli, hello, can you hear us? Let's try Cadelli again in a few moments. So we'll just give it a few minutes just to see if any more questions come in. And then perhaps we can go back to Kareli. Speaker 200:19:20And just to give our recent questions, I mean, one thing I have to extend the answer to the last question when asked me, I mean why do we register the impairment in operating expenses? That's according to the accounting principles. I mean that's the way it's supposed to be. Operator00:19:41Understood. Thank you. Look, I'm not seeing any more questions. So at this stage, perhaps I can hand back to Humberto and Manuel for closing remarks. [SPEAKER JOSE HUMBERTO ACOSTA MARTIN:] Thank you. Speaker 200:19:54Well, in closing, I have to say that 2023 was indeed a very challenging year with social unrest, inclement weather and the overall slowdown of economic growth in Peru affecting cement and building solutions demand. Nevertheless, we were able to achieve record results in terms of EBITDA and remarkable profitability by focusing on operational efficiencies and our long term strategy. We are an enormous component of digital commercial tools. We foresee a more favorable demand environment in 2024 and feel we are very well prepared with skill number 4 in Pacasmayo to take fully advantage of this scenario as our focus on digital transformation, innovation and overall business sustainability has provided us with the tools to do so. And let me close by saying we remain extremely optimistic about the future of our country and particularly on the future of our region. Speaker 200:20:48Thank you, everybody, for joining us today, and always thank you for your renewed interest in our company. Have a very nice day. Operator00:20:56Thank you. That concludes the call for today. Thank you, and have a nice day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCementos Pacasmayo S.A.A. Q4 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.comTrump’s tariffs just split the AI market in twoTrump’s tariff just split the AI market – among others – in two. One group of AI companies—the ones relying on cheap foreign hardware—just saw their costs shoot through the roof. For the other group of AI companies, they were just handed a massive competitive advantage. Make no mistake, AI as a whole is still a game-changer for the global economy. But within the AI sector, Trump’s tariffs have created a huge divergence.April 22, 2025 | Traders Agency (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 5 speakers on the call. Operator00:00:00Good day, ladies and gentlemen. Welcome to Pacasmayo's 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode, and please note that this call is being recorded. At the conclusion of our prepared remarks, we will conduct a question and answer session. I would now like to introduce your host for today's call, Mrs. Operator00:00:20Claudia Bustamante, Sustainability and Investor Relations Manager. Mrs. Bustamante, you may begin. Speaker 100:00:28Thank you, Tim. 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 100:00:39Mr. Nadal will begin our call with an overview of the quarter, focusing primarily on our strategic outlook for the short and medium term. Mr. Ferreros will then follow with additional commentary on our financial results. We'll then turn the call over to your questions. Speaker 100:00:55Please 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 may 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 Naran. Speaker 200:01:22Thank you, Claudia. Welcome, everyone, to our quarterly results conference call, and thank you so much for joining us today. This quarter, we continue to focus on our strategy, which led us to deliver outstanding results in terms of profitability. We reached a gross profit margin of 39.4%, almost 9 percentage points higher than the same quarter of last year. This significant increase in margin was mainly due to the lower production cost of our new which also allowed us to replace imported clinker with our own clinker as well as to the decrease in the cost of coal. Speaker 200:02:00Considering that we now have this additional capacity that is both efficient and more environmentally friendly, we decided to make an impairment to our vertical kilns. This non cash effect affected EBITDA, but our adjusted EBITDA increased 29% year over year this quarter and adjusted EBITDA margin reached 30.5%. This outstanding and I want to stress, outstanding quarter results have allowed us to reach a record adjusted EBITDA of $518,300,000 in 2023, the highest in all the history of Pacasmayo. We firmly believe these are remarkable achievements, especially considering that in terms of demand, it was a very challenging year as well as the social conflict and Saicco and Yacu that affected our sales in the first half of the year. We are convinced that efficiencies achieved will be sustainable over time, making for a very promising 2024 as volumes should continue the positive strength we started seeing in the second half of last year. Speaker 200:03:01In terms of our long term strategy, I'd like to take this opportunity to look back on our digital strategy and how we have progressed over time. If you look at the digitalization of our commercial strategy, we have now migrated completely from a traditional model to a fully digital one. For self construction segment, we continue to enhance Mundo Experto, an ecosystem of digital solutions that targets the needs of Foreman, self builders and individual consumers. We also have Consturi Xperto, a digital platform for Foreman that provides them with the daily tools and training to help them improve professionally. For hardware stores, we have Perdexperto, developed to help them grow their business, digitalize their orders and get training on topics linked to their main needs. Speaker 200:03:47For our concrete clients, we have PACCARS Pro, a platform that provides comprehensive solutions for each project, including online scheduling and real time tracking of the orders. This year, we are focused on improving our service to the concrete segment, adapting concrete segment, adapting it to the unique needs of each client, creating new tools to establish different prices according to what each client requires. Finally, we know that digitalization is needed not only for commercialization, but also to enhance internal processes. This is how we are taking the steps needed to become a fully data driven organization. We have created a data and analytics committee to prioritize our sponsor initiatives and create the 1st agile unit in Pacasmayo. Speaker 200:04:32We are also in the process of designing and making available a corporate data ecosystem and implementing solutions that generate value for our business. We are convinced that these tools and surely more to come in the future along IA will be key to the success of our business in the upcoming years. I would like now to briefly, but not less, very importantly, mention an important milestone for IU, our solution aimed at families that need help financing the construction needs. Through an integrated purchasing method, people are able to define a building project and buy the materials that they need, they deliver on a monthly basis at their own pace until they have all of the materials needed to carry out their chosen project. In December, as they consistently making these payments, one of our clients was able to build his new roof. Speaker 200:05:24We are very proud, extremely proud of his achievement and we'll continue to promote IU so our more families can build a safe home. Finally, I would like to highlight our continued and renovated commitment and belief in our country. Despite the instability and extremely complex political scenario, we have been immersed in since 2020, we decided to bet on the future growth of Peru, as we have been doing for over 65 years and invested around $85,000,000 to optimize our clinker capacity and $403,000,000 to Rostoma Road in Piura to improve connectivity in the event of heavy rains. We firmly believe that our country holds great potential and thereby standing by in the good times and bad times, we will see it reach the potential in the near future. I will now turn the call over to Manuel to get into more detailed financial analysis. Speaker 300:06:21Thank you, Humberto. Good morning, everyone. Our Q4 2023 revenues were $511,400,000 a 4.2 percentage decrease when compared to the same period of last year. Gross profit, however, increased 23.6 percent, achieving PEN 200,100,600,000 mainly due to lower costs as we discontinue the use of imported clinker now that our new kiln is fully operational, as well as lower cost of coal. Consolidated EBITDA decreased 1.2%, mainly due to the impairment of our vertical kilns, as Humberto mentioned before. Speaker 300:07:07But without this effect, the adjusted EBITDA was PEN156.1 million, 29% increase compared to the previous year, despite the decrease of revenues, mainly due to operational efficiencies and lower raw material costs mentioned before. For 2023, revenues decreased 7.8% when compared to the same period of 2022, mainly due to lower levels of public and private investments as well as the negative impact of Cyclone Yako during the Q1 of the year. However, gross profit increased 5.7% when compared to the previous year, mainly due to efficiencies achieved during the second half of the year as well as higher average prices. Adjusted EBITDA increased 4.9% and adjusted EBITDA margin increased 3.2 percentage points when compared to the same period of last year. Turning to operational expenses. Speaker 300:08:14Administrative expenses increased 3.8% this quarter compared to the Q4 of 2022 and a 3.1% in 2023 compared to the same period of last year, in line with inflation. Selling expenses increased 12.8% this quarter when compared to the Q4 of 2022, mainly due to an increase in advertising expenses as well and as expenses related to the advancement of our digital strategy. During 2023, selling expenses increased 2.1% when compared to the previous year. Moving on to the different segments, sales of cement decreased 7.3% in the Q4 of 2023 compared to Q4 of 2022 and 5.8% in 2023 compared to 2022, mainly due to the decreased demand from self construction segment as well as for private and public works. However, gross margin increased 11.7 percentage points during the Q4 of 2023 and a 5 percentage points during the whole year when compared to the Q4 of 2022 and 2020 sorry Q4 of 2022 and the whole year, respectively, mainly due to cost optimization as we reduced the consumption of imported clinker and replaced it with clinker produced in the new and much more efficient kiln in Pacasmayo as well as lower cost of raw material such as coal. Speaker 300:09:59During this quarter, we are glad to report that sales of concrete pavement at mortars continue their positive trend, increasing 34.3% when compared to the Q4 of 2022, mainly due to increased sales of payment for the Piura Airport. During 2023, sales of concrete, payment and mortar decreased 4% when compared to the same period of last year, mainly due to a decrease in public and private investment during the first half of the year. Gross margin decreased 1.8 percentage points in the Q4 of 2023 compared to the Q4 of 2022 and 4.1 percentage points in 2023 compared to 2022, mainly due to lower margin for larger infrastructure projects. Sales of precast materials also increased 19.8% compared to the Q4 of 2022, mainly due to increased public investment this quarter for the construction of related projects. Gross margin increased by 26.6 percentage points in the Q4 of 2023 and 10.7 percentage points in 2023 compared to the Q4 of 2022 and the whole year, respectively, as higher sales volumes allow us for dilution of fixed costs. Speaker 300:11:32The net profit increased decreased 7.7 percent this quarter when compared to the same quarter last year and a 4.5% in the whole year compared to last year, mainly due to the non cash effect of the impairment of our vertical kilns. However, if we do not consider this effect, net profit for the year would have been $194,700,000 a 10.1% increase when compared to the previous year, mainly due to operational efficiencies mentioned before. In terms of debt, our net debt to adjusted EBITDA ratio was 3x, which is a level we expect to sustain and progressively decrease as EBITDA increases since we currently do not plan to incur in additional debt. To summarize, this quarter results shows the continued benefit of focusing on cost management and operational efficiencies, preparing and improving demand environment. We are confident that we will continue delivering positive results during the following quarters. Speaker 300:12:55Please can we open now for questions? Operator00:13:00Yes, of course. Thank you. So we will now move to the question and answer section. So our first question comes from Fernando Romero from Abaco Capital. Your line is open. Operator00:13:24Please go ahead. Hi, Fernando, can you hear us? Perhaps we can move on to another question in the meantime. Fernando, are you there? Sorry, let's move on to another question quickly first and maybe we can get the question from Fernando later. Operator00:13:55So let's move on. We've got a question from Natalia Leao from JPMorgan. Please go ahead. Speaker 400:14:06Hi. Thanks for taking my question and congrats on the results. I was just I want to understand better the growth in gross margins. So you mentioned lower energy costs and the lower cost of production from the new kiln. Just how many percentage points came from lower energy cost and how many from the new kiln? Speaker 400:14:28Just to understand where can it go going forward? Speaker 300:14:32Yes. We can consider going forward. It's we expect the whole year, we should be around 28% EBITDA margin, basically because we're as we mentioned, the cost of the coal has gone extremely down from 1 year to the other. And also, we are not using any more imported tanker. So that should be if we compare it with EBITDA of last year that was around 25.5 average, we should have this year 2024 whole year around 28. Speaker 400:15:09Okay, great. Understood. And if I may have another question, I was just wondering how do you see volumes for 2024, the impact from El Nino, could they decrease even more this year or should we expect maybe flattish volumes? Speaker 200:15:24I think volumes will be between would be a moderate growth. I don't see them going down. We and Nino will not be happening in the North unless something dramatic occurs. But I mean the charges of an extreme Nino in the North are 0% right now according to authorities. So the Nino will not impact, and we have a lot of positive news in the north. Speaker 200:15:46The government agreement to develop Cytomotik with the Canadians has been signed, and I think that's going to be the way to go. So I would think that volumes, unlike the past 2 years, will grow according to Apollo, they talk about 4%. I don't know if I'll be that optimistic, but between 2% and 4% will be my guess. Speaker 400:16:05Great. Thank you so much. Speaker 200:16:06You're welcome. Operator00:16:12Okay. Thank you. So our next question, we have a text question from Jonel Coe from Seminario and he asks, regarding Pacasmayo's dividend policy, is there any limit to distribute previous year's retained earnings? Speaker 200:16:29Technically, there's no limit. I mean, we've been very consistent in our dividend policy over the last, I believe, 5 to 7 years. The philosophy behind that, I mean, first of all, it's not the CEO to decide, it's for the Board to decide and eventually for our shareholders meaning to ratify. But our idea is, I mean, we have no need for cash and we have in excess that we've given out in dividends. So if anything, the biggest limitation we have is the cash position of the company. Speaker 200:16:56But in terms of accumulated profits, there's no limitation. Operator00:17:03Great. Thank you. So we've got a question from Gerard Forte from AFP Integra. Hello. I have a few questions regarding the vertical kilns impairment for this quarter. Operator00:17:23Are you expecting more impairments in the Q1 2024? What's the impact of this impairment regarding the clinker capacity in Pacasmayo? In the MDA report, you said the total capacity in Pacasmayo plant was $1,800,000 below the $2,100,000 expected with the new Pacasmayo kilns. Why did you report the impairment inside the operating income? Since it's a nonrecurrent, non operating expense, it shouldn't impact the EBITDA numbers, same with donations, which are being considered as an operating expense? Operator00:17:55Thank you. Speaker 200:17:57Thank you for the question. I mean, we expect no further impairments. The vertical kilns now have been completely its value has been taken completely to CRO. And like I said, I mean, we talk about the capacity of Pacasmayo, we have taken away now you have to take away what the vertical kilns the 8 vertical kilns were supplying, and you have to add 600,000 tons of capacity that kiln number 4 came. Operator00:18:25Perfect. Thank you. So we have a voice question now from Kareli Medina from Intisaguro. Please go ahead. Hi, Kareli, can you hear us? Operator00:18:49Cadelli, hello, can you hear us? Let's try Cadelli again in a few moments. So we'll just give it a few minutes just to see if any more questions come in. And then perhaps we can go back to Kareli. Speaker 200:19:20And just to give our recent questions, I mean, one thing I have to extend the answer to the last question when asked me, I mean why do we register the impairment in operating expenses? That's according to the accounting principles. I mean that's the way it's supposed to be. Operator00:19:41Understood. Thank you. Look, I'm not seeing any more questions. So at this stage, perhaps I can hand back to Humberto and Manuel for closing remarks. [SPEAKER JOSE HUMBERTO ACOSTA MARTIN:] Thank you. Speaker 200:19:54Well, in closing, I have to say that 2023 was indeed a very challenging year with social unrest, inclement weather and the overall slowdown of economic growth in Peru affecting cement and building solutions demand. Nevertheless, we were able to achieve record results in terms of EBITDA and remarkable profitability by focusing on operational efficiencies and our long term strategy. We are an enormous component of digital commercial tools. We foresee a more favorable demand environment in 2024 and feel we are very well prepared with skill number 4 in Pacasmayo to take fully advantage of this scenario as our focus on digital transformation, innovation and overall business sustainability has provided us with the tools to do so. And let me close by saying we remain extremely optimistic about the future of our country and particularly on the future of our region. Speaker 200:20:48Thank you, everybody, for joining us today, and always thank you for your renewed interest in our company. Have a very nice day. Operator00:20:56Thank you. That concludes the call for today. Thank you, and have a nice day.Read morePowered by