Cementos Pacasmayo S.A.A. (CPAC) Q4 2025 Earnings Call Transcript
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Overview
The earnings call presents mixed results: strong cement sales and improved gross margins in some areas contrast with declines in others, notably concrete sales. The negative net income due to transactional expenses is concerning, though management remains optimistic about future margins. The Q&A reveals potential risks and uncertainties, especially regarding the Holcim transaction and unclear future guidance. These factors, combined with the strategic focus on sustainability and client-centric approaches, suggest a neutral stock price movement over the next two weeks.
Key Financial Performance
Sales Volumes Decreased by 8.2% in Q4 2025 compared to Q4 2024, but increased by 7.2% for the full year 2025 relative to 2024. The decrease in Q4 was not explicitly explained, while the annual increase was driven by stronger demand for infrastructure projects and consistent performance in the self-construction segment.
EBITDA (Quarter) Reached $158.7 million in Q4 2025, an 11.4% increase compared to Q4 2024. This growth was attributed to disciplined execution and cost efficiencies, excluding one-off expenses related to the Holcim share purchase agreement.
EBITDA (Full Year) Achieved PEN 594.2 million for the full year 2025, marking a 6.4% year-over-year increase when excluding one-off expenses. This was driven by operational excellence and cost efficiencies.
Revenues (Quarter) Increased by 6.2% year-over-year in Q4 2025, reaching PEN 559.5 million. Growth was driven by higher sales of cement, concrete, and pigment for infrastructure projects.
Revenues (Full Year) Grew by 7% in 2025 compared to 2024. This was attributed to higher sales of cement, concrete, and pigment for infrastructure projects.
Gross Profit (Quarter) Increased by 11.4% year-over-year in Q4 2025. This improvement was mainly due to lower raw material costs, greater consumption of own clinker, and operational efficiencies.
Gross Profit (Full Year) Increased by 10.8% in 2025 compared to 2024. The growth was driven by lower raw material costs, higher use of own clinker, and operational efficiencies.
Administrative Expenses Increased by 5.7% in Q4 2025 and by 50% for the full year 2025 compared to 2024. The increase was mainly due to higher personnel expenses resulting from labor union negotiations.
Selling Expenses (Quarter) Decreased by 8.3% in Q4 2025 compared to Q4 2024, primarily due to lower depreciation and reduced advertising and promotion expenses.
Selling Expenses (Full Year) Increased by 40% in 2025 compared to 2024, driven by higher advertising and promotion expenses during the first 9 months of the year and labor union-related costs.
Cement Sales (Quarter) Increased by 30.6% in Q4 2025, driven by robust demand for fast cement in the construction sector.
Cement Sales (Full Year) Increased by 8.7% in 2025 compared to 2024, linked to strong demand in the agro, industrial, and fishing sectors.
Gross Margin (Quarter) Increased by 0.4 percentage points in Q4 2025 compared to Q4 2024, mainly due to reduced raw material costs and lower consumption of imported clinkers.
Gross Margin (Full Year) Increased by 1.9 percentage points in 2025 compared to 2024, driven by reduced raw material costs and lower consumption of imported clinkers.
Concrete, Pavement, and Mortar Sales (Quarter) Decreased by 25.1% in Q4 2025 compared to Q4 2024, mainly due to lower sales volume as the Motupe riverbank defense project was put on standby.
Concrete, Pavement, and Mortar Sales (Full Year) Increased by 6.3% in 2025 compared to 2024, driven by higher volumes for infrastructure projects.
Gross Margin for Concrete, Pavement, and Mortar (Quarter) Decreased by 7.8 percentage points in Q4 2025 compared to Q4 2024, due to the execution of the Piura airport project and lower fixed cost dilution from the halt of the Motupe project.
Gross Margin for Concrete, Pavement, and Mortar (Full Year) Decreased by 3.2 percentage points in 2025 compared to 2024, due to the same reasons as the quarterly decline.
Precast Materials Sales (Quarter) Decreased by 16% in Q4 2025 compared to Q4 2024, mainly due to lower sales volume and a high comparative base from a road improvement project in Q4 2024.
Precast Materials Sales (Full Year) Increased by 3% in 2025 compared to 2024, driven by higher demand from the public sector.
Gross Margin for Precast Materials (Quarter) Improved by 5.4 percentage points in Q4 2025 compared to Q4 2024, due to relative pricing and higher fixed cost dilution.
Gross Margin for Precast Materials (Full Year) Improved by 1 percentage point in 2025 compared to 2024, due to similar factors as the quarterly improvement.
Net Income (Quarter) Negative in Q4 2025 due to transactional expenses. Excluding these, net income would have been PEN 59.8 million, a 19.6% increase over Q4 2024.
Net Income (Full Year) Would have been PEN 231.8 million in 2025, a 16.5% increase compared to 2024, excluding one-off transactional expenses.
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Operating Highlights
Holcim acquisition of controlling stake: Holcim announced an agreement to acquire a 50.01% controlling stake in Cementos Pacasmayo for PEN 5.1 billion, representing a strong multiple of 9x record EBITDA. This transaction is pending regulatory approvals and is expected to close in the upcoming months.
Cement sales growth: Cement sales increased by 30.6% in Q4 2025 and 8.7% for the full year 2025 compared to 2024, driven by strong demand in the self-construction sector and key industries like agro, industrial, and fishing.
Operational efficiencies: Gross profit increased by 11.4% in Q4 2025 and 10.8% for the full year 2025 due to lower raw material costs, higher use of own clinker, and operational efficiencies from production plans.
Sustainability achievements: Achieved 3-star recognition from Peru's Minister of Environment for consecutive years of reduced greenhouse gas emissions. Specific plants (Rioja, Pacasmayo, and Piura) received recognition for emission reductions in 2024 and 2023.
Sustainability and ESG leadership: Recognized as an industry leader in the Merco ESG responsibility ranking for the 10th consecutive year, placing ninth overall in Peru's most responsible companies ranking.
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Risk or Challenges
Regulatory Approvals for Acquisition: The acquisition of a controlling stake in Cementos Pacasmayo by Holcim is pending regulatory approvals, which introduces uncertainty and potential delays in the transaction.
Sales Volume Decline in Q4 2025: Sales volumes decreased by 8.2% in Q4 2025 compared to the same period last year, which could indicate challenges in maintaining consistent demand.
Increased Administrative Expenses: Administrative expenses rose by 50% for the full year 2025 compared to 2024, driven by higher personnel costs due to labor union negotiations, which could pressure profitability.
Selling Expenses Increase: Selling expenses increased by 40% for the full year 2025, primarily due to higher advertising and promotion expenses, which could impact cost management.
Project Delays and Standby: The Motupe riverbank defense project was put on standby, leading to a 25.1% year-over-year decline in sales of concrete, pavement, and mortar in Q4 2025. This delay also affected gross margins.
Gross Margin Contraction in Specific Segments: Gross margins for concrete, pavement, and mortar decreased by 7.8 percentage points in Q4 2025 and 3.2 percentage points for the full year, primarily due to project execution challenges and lower fixed cost dilution.
Precast Material Sales Decline: Sales of precast materials decreased by 16% in Q4 2025 compared to the same period in 2024, attributed to lower sales volume and a high comparative base from a prior project.
Net Debt to EBITDA Ratio Increase: The net debt to EBITDA ratio increased to 2.8x, reflecting higher leverage, which could pose financial risks if not managed effectively.
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Guidance & Outlook
Regulatory Approvals and Acquisition Timeline: The acquisition of Inversiones Aspi by Holcim, which owns a 50.01% controlling stake in Cementos Pacasmayo, is pending regulatory approvals and is expected to close in the upcoming months.
Sustainable Development and Regional Growth: The company plans to collaborate with Holcim to promote sustainable development, create new opportunities, and contribute to the growth of Peru and the wider region.
Market Demand and Sales Projections: Future growth is expected to be driven by strong demand for infrastructure projects and consistent performance in the self-construction segment.
Operational Excellence and Profitability: The company remains focused on operational excellence, profitability, and disciplined execution to sustain and improve performance.
Restart of Infrastructure Projects: The Motupe riverbank defense project, which was put on standby, has been prioritized to restart in the near future.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Could you please provide more details about the transaction with Holcim? Which steps are planning to close the transaction? Is there any risk we should be aware of? And how do you feel about the regulatory approvals for the deal?
A:Holcim has acquired Inversiones Aspi, which controls 50.01% of Pacasmayo's common shares. The regulatory approval process is ongoing and expected to be completed in the coming months. Management does not foresee any issues arising.
Q:Could you explain why your acquisition-related expenses are assumed by Pacasmayo and why are they so high?
A:The expenses are related to change of control issues tied to long-standing contracts within the company. Part of these expenses will be covered by Holcim, and the Board approved the expenses as reasonable given the sale price achieved.
Q:Why did Pacasmayo have to recognize PEN 77 billion to PEN 80 million in expenses related to the Holcim transaction, considering that Holcim is acquiring Aspi's majority stake and not the company itself?
A:The expenses are tied to contracts in place for many years related to the change of control. The Board decided on this approach, and management does not foresee any regulatory impediments. Holcim is required by law to launch an offer for the remaining shares, which will benefit all shareholders.
Q:Given the pause of the Motupe River Bank protection project and its impact on volumes and margins in the fourth quarter of 2025, should we expect similar project-related disruptions or margin pressures in the coming quarters? How could this affect concrete pavements and mortar performance and overall margins looking into 2026?
A:Management expects EBITDA margins to remain stable or slightly higher due to energy-saving projects in the second half of the year. They anticipate a positive outlook for margins and expect spending to pick up after elections in the second and third quarters.
Q:Could you provide any guidance on revenue growth and EBITDA margins expected for 2026?
A:Management is optimistic about volume growth and expects EBITDA margins to remain stable or increase due to efficiencies, including energy-saving measures in the second half of the year. They anticipate a stronger year in 2026 compared to 2025.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on revenue growth and EBITDA margins for 2026, using vague language and focusing on general optimism without concrete data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aspi stake
CFO analysis
Director Mr
ESG responsibility
Environment MINAM
Instructions host
Inversiones Aspi
MINAM Peru
MINAM submission
Manager today
Merco ESG
Minister Environment
Mr Investor
Ms Claudia
PEN multiple
Pacasmayo Peru
Pacasmayo Piura
Pacasmayo term
Peru Minister
Peru achievement
Peru carbon
Relations Sustainability
Rioja plant
Sustainability Manager
achievement recognition
action progress
agreement Inversiones
agreement increase
announcement agreement
approval
commitment
emission
evaluation
excellence
focus
leader
milestone
record
sustainability
CPAC Transcript
Cementos Pacasmayo S.A.A. (CPAC) Q1 2026 Earnings Call Transcript
Positive4-27
The earnings call highlighted strong financial performance with significant growth in EBITDA, net income, and sales volume, despite increased selling expenses and a decrease in concrete segment revenue. Management's explanation of cost improvements as structural suggests sustainability. However, uncertainties remain due to unclear responses on selling expenses and capital allocation post-acquisition. The positive outlook is supported by operational excellence, expanded margins, and optimistic guidance. Although market cap data is unavailable, the overall sentiment suggests a positive stock movement in the short term.
Trisura Group Ltd. (TSU:CA) Q4 2025 Earnings Call Transcript
Positive2-13
The earnings call shows strong financial performance with a 25% increase in net premiums and an 18% increase in book value per share. The company is expanding in the U.S. Surety market and has favorable reserve developments. Despite a higher debt-to-capital ratio, it's still under conservative targets. The Q&A highlights growth in the Warranty business and strategic expansion plans. Concerns about AI investments were vague but don't overshadow the positive outlook. Overall, the sentiment is positive, likely leading to a 2% to 8% stock price increase in the next two weeks.
Cementos Pacasmayo S.A.A. (CPAC) Q4 2025 Earnings Call Transcript
Unknown2-13
The earnings call presents mixed results: strong cement sales and improved gross margins in some areas contrast with declines in others, notably concrete sales. The negative net income due to transactional expenses is concerning, though management remains optimistic about future margins. The Q&A reveals potential risks and uncertainties, especially regarding the Holcim transaction and unclear future guidance. These factors, combined with the strategic focus on sustainability and client-centric approaches, suggest a neutral stock price movement over the next two weeks.
Cementos Pacasmayo S.A.A. (CPAC) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call highlights strong financial performance with increased sales volumes and net income, improved cost efficiency, and a positive outlook on infrastructure projects. Despite increased expenses, the company's net profit rose, and debt levels improved. The Q&A session revealed continued strong volume and margin expectations, with no significant electoral impact anticipated. The company's strategic focus on infrastructure and marketing investments suggests a positive sentiment, likely leading to a stock price increase over the next two weeks.
CPAC Report
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