Cementos Pacasmayo S.A.A. ($CPACASC1)

Good day, ladies and gentlemen. Welcome to Pacasmayo First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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. Claudia Bustamante, Investor Relations Managing Director. Mrs. Bustamante, you may begin.

Thank you, Rafal. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer; and Ms. Ely Hayashi, our Chief Financial Officer. Mr. Nadal will begin our call with an overview of the quarter focusing primarily on our strategic outlook for the short and medium term. Ms. Hayashi will then follow with additional commentary on our financial results. We'll then turn the call over to your questions. Please 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.

Thank you, Claudia. Welcome, everyone, to today's conference call, and thank you for joining us today. As we discussed last quarter, our company has entered a [ transcendental ] new chapter in its almost 70-year history. On March 30, 2026, a significant milestone was finalized with the completion of the acquisition of the Inversiones Aspi by Holcim Limited, which now holds a 50.01% controlling interest in Cementos Pacasmayo. This change of control marks a powerful new stage in our evolution, opening global opportunities for our teams and promoting responsible, sustainable construction on a much wider scale. While we look forward to collaborating with a global leader like Holcim, I want to express my deepest and sincere gratitude to Hochschild Group for a decade of [ vision ] and leadership that build the strong foundations upon which we stand today. Our essence, values and commitment to development of Peru remain absolutely intact. I would like now to move on to an overview of our results for the first quarter of 2026. During this period, we achieved significant growth and demonstrated remarkable resilience. We saw strong momentum in sales volume with an 11.7% increase year-over-year, driven primarily by higher demand for cement and concrete. Our solid operational performance was further reflected in our profitability. Consolidated EBITDA reached PEN 177.9 million, an outstanding 32.1% decrease compared to the first quarter of 2025. We achieved a significant expansion of our EBITDA margin, which reached 32%, up from 27% in first quarter of 2025. This was driven by disciplined cost control and gross margin expansion in our core businesses due to operational efficiencies. Driven by our commitment to leading the industry responsibly, we reached historic achievements in sustainability this quarter. For the sixth consecutive year, we secured a position in S&P Global Sustainability Year 2026. Most notably, we have now entered a global top 10% of construction materials industry, validating the continued solution of our ESG management. In terms of social impact, we recently formalized a strategic partnership with the Inter-American Cement deration, FICEM, and Habitat for Humanity. This alliance integrates our local Sueños en Concreto program into the 100,000 Floors to Play On initiative, aiming to replace their floors with concrete to improve the health and quality of life for thousands of families in northern Peru. As we mentioned, we are very happy with the beginning of this year, and we hope this year will continue in a similar manner. I will now turn the call over to Ely to go into a more detailed financial analysis.

Thank you, Humberto. Good morning, everyone. For the first quarter of 2026, our revenue growth was very encouraging. Total revenues reached PEN 555.7 million, representing an 11.3 percentage increase compared to the first quarter of 2025. This growth was primarily driven by [indiscernible] 11.7% increase in total sales volumes across cement, concrete and precast. Specifically, cement volumes showed strong resilience, particularly in the bagged cement segment, which continues to be our primary driver in the self-construction market in the north of Peru. Additionally, we saw a pickup in concrete sales as infrastructure projects in the region began to retain momentum. Gross profit for the quarter increased significantly, supported by higher volumes and improved operational efficiency. We are seeing the continued benefit of our customized production at the Pacasmayo plant. Turning now to operating expenses. Administrative expenses for the first quarter decreased slightly by 0.7 percentage compared to the first quarter of 2025, mainly due to lower personnel expenses, primarily reflecting a lower collective bargaining volume than in the first quarter of '25. Selling increased 33.5% in the first quarter of '26 compared to the first quarter of 2025, mainly due to higher advertising and promotion expenses related to marketing and loyalty programs from activated retailers as well as an increase in provisions for doubtful payment. Moving to profitability, our consolidated EBITDA reached PEN 179.9 million, a remarkable 32.1 percentage increase compared to the first quarter of 2025. This was driven by the combination from higher revenues and moderate price adjustment in the cement segment as well as a significant reduction in unit costs across our cement and concrete business lines. Along the same line, our EBITDA margin expanded to 32%, a 5 percentage point improvement over the first quarter of '25. This level of profitability reflects our focus on operational excellence and disciplined expense management. Moving on to the different segments. Cement revenues grew 16% to PEN 466.4 million, representing 86.5% of our total sales of the quarter. This performance was primarily driven by higher sales volumes of back cement for the self-construction segment. The gross margin from cement expanded to 48.2%, up 1.5 percentage points from first quarter '25. This improvement was driven by higher volume as slight improvement in average prices and lower unit costs resulted from reduced downtime of our kilns. For the Concrete segment and Mortar segment, revenue decreased 15.2% to PEN 56 million. This decline was mainly due to a higher comparative base in the first quarter of '25, which included significant volumes from the Piura airport project. Despite lower volumes, the gross margin saw a remarkable expansion of 18.3 percentage points -- within 16.1 percentage. This increase in profitability was mainly driven by sales to Yanacocha project, which required more and specialized higher-margin concrete solutions compared to a lower margin [ airport work ]. Precast sales increased 4.8% to PEN 6.6 million this quarter when compared to the same period of last year. This growth was supported by increased demand from the private sector. Gross margins to Precast reached 9.1%, a significant improvement of 7.5 percentage points over the previous year. This was primarily achieved through higher sales volumes, which allowed for better dilution of fixed costs. Consolidated net income for the quarter was PEN 81.9 million, a remarkable 55.4 increase year-over-year. This growth is a direct result of higher operating profit and a decrease in financial expenses as we continue to successfully reduce our leverage. Our net debt-to-EBITDA ratio stood at 2.6x. To summarize, we continue to deliver solid financial results this quarter by capitalizing on favorable market conditions while diligently managing costs to achieve sustained profitability. Operator, can we now open the call for questions?

[Operator Instructions] Okay. Looks like there are no questions from the audience. So I'm going to pass the line back to the team for their closing remarks.

In closing, our remarkable results this quarter reflect both the resilience of the northern Peruvian market and our team's exceptional execution. While our double-digit revenue growth highlights the strength of our regions, it is our disciplined management that delivered such a 32% EBITDA margin, one of the highest we have achieved in recent years. This peak in profitability is matched by historic sustainability milestones, not only our entering to the top 10% of S&P Global Sustainability Yearbook and our tangible social impact to the 100,000 Floors initiative. Ultimately, the results and our finalized partnership with Holcim serve as a powerful endorsement of our strategy and our unwavering belief in the long-term potential of Peru as we focus on driving the sustainable progress of our country. We have one question from Integra.

Yes, yes. So maybe I will quickly read that question from Gerard Fort from Integra.

Yes, please.

Congratulations on the strong Q1 2026 results. Margins and profitability clearly exceeded expectations. I have 2 questions. Gross margins expanded materially and exceeded our expectation. How much of the improvement in cement unit cost do you consider structural, operational efficiencies, energy [indiscernible] versus more cyclical factors such as volume and mix? Selling expenses increased meaningfully this quarter driven by marketing and higher credit provisions. How much of this increase should we view as recurring versus one-off or timing related?

Yes. In terms of your question, I mean, these are not really cyclical factors. As you know, I mean, our cement sales in the past is [indiscernible] cyclical in the second semester of the year. Usually, the first quarter is the weakest one, but not by a long shot. So I think in terms of selling expenses, we are -- we keep investing and positioning our brand. We keep investing in securing our [indiscernible] and [indiscernible] are very happy. So I think, I mean our challenge now is to maintain the current margin in terms of EBITDA and profitability. To add, in terms of the marketing, I mean, to be absolutely precise, I mean in the second semester, they may be a little more [indiscernible] of how we are doing the provisions.

SP1 We also got a voice question from Gabriel from Scotiabank.

Well, just a quick follow-up question. Now that Holcim has completed the acquisition and the controlling state, can you elaborate on any change that we should expect on capital allocation, strategic priorities, perhaps dividends?

I mean, I think, so far, we'll have to wait to see what they decide as new shareholders. For the time, we keep the course steady.

[Operator Instructions] Okay. We are seeing no further questions. So maybe I will pass the line back to the management team to finalize the call.

Like I said before, we've had a very exciting beginning of the quarter. And I think, I mean, it's all a reflection of an incredible team always pushing forward. But it's also a normal reflection on the potential and the durability and the resilience of a country and specifically of a region that has shown always good attitude forward. And we are very convinced that the future and the best is still to come. Thank you, everybody, for joining us today. Should you have any further questions, you know where to find us. Thank you.

Thank you. This concludes our call for today. We are now closing all the lines. Goodbye.