• Revenue: $517.8 million, a 0.2% increase compared to Q3 2023.
• Gross Profit: Increased 12.1% year-over-year.
• Consolidated EBITDA: Record $154.6 million with a margin of 29.9%.
• EBITDA Margin: Increased by 5 percentage points compared to Q3 2023.
• Net Income: Increased 25.9% year-over-year.
• Administrative Expenses: Increased 15.4% in Q3 2024.
• Selling Expenses: Increased 10.7% in Q3 2024.
• Cement Sales: Decreased 2.7% in Q3 2024.
• Concrete and Mortar Sales: Increased 25.6% in Q3 2024.
• Precast Materials Sales: Increased 10.4% in Q3 2024.
• Net Profit: Increased 35.9% in Q3 2024.
• Net Debt Ratio: 2.8 times, below the previous quarter's level.

• Warning! GuruFocus has detected 9 Warning Signs with CPAC.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cementos Pacasmayo SAA (NYSE:CPAC) achieved a record consolidated revenue of $154.6 million, marking an increase of almost 20% year over year.
• Net income increased by 25.9% due to operational efficiencies and cost management.
• The company is implementing innovative solutions for riverbank protection using local materials, which are more cost-effective and durable.
• Cementos Pacasmayo SAA (NYSE:CPAC) is actively incorporating AI and machine learning to enhance operational efficiencies and employee satisfaction.
• Gross profit increased by 12.1% compared to the previous year, driven by cost efficiencies and lower raw material costs.

Negative Points

• Sales of cement decreased by 2.7% in the quarter and 3.6% during the first nine months of the year compared to the same period in 2023.
• Administrative expenses increased by 15.4% in the third quarter due to higher personnel expenses and IT-related costs.
• Selling expenses rose by 10.7% in the quarter, primarily due to increased personnel expenses.
• Gross margin for concrete and mortar sales decreased due to unfavorable exchange rate differences.
• The company faces challenges in maintaining sustainable price hikes due to market conditions.

Q & A Highlights

Q: Can you provide insights on the cement volumes in Peru and expectations for 2025? A: Humberto Reynaldo Nadal del Carpio, CEO, mentioned that cement volumes increased by 16% quarter-over-quarter. The company anticipates better momentum in the second half of the year due to increased government spending. For 2025, they expect an increase in volumes, driven by significant public projects in the north.

Q: Are the current margins sustainable, and what is the outlook for future margins? A: Humberto Reynaldo Nadal del Carpio, CEO, stated that the margins are expected to remain stable due to operational efficiencies. Manuel Ferreyros Pena, CFO, added that the EBITDA margin for the next year is projected to be slightly over 29%.

Q: How will the new Yana Kocha project impact concrete dispatches, and will it replace volumes from the Pura Airport project? A: Manuel Ferreyros Pena, CFO, explained that the Yana Kocha project will last approximately 18 months, with volumes similar to those of the Pura Airport project.

Q: What are the drivers for growth in self-construction, and how do they impact cement demand? A: Humberto Reynaldo Nadal del Carpio, CEO, highlighted that employment, particularly in fishing and agriculture, is crucial. These sectors have performed well, translating into increased cement demand as people invest in self-construction.

Q: What is the long-term outlook for margins in concrete and prefabricated products? A: Humberto Reynaldo Nadal del Carpio, CEO, noted that profitability in concrete depends on project size. Larger projects, like treatment plants, are more profitable. As public investment picks up, margins in concrete are expected to improve.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.