Cementos Pacasmayo consolidated results for the third quarter of 2018

Wednesday, October 31, 2018

Press release by Cementos Pacasmayo

Cementos Pacasmayo SAA announces consolidated results for the third quarter of 2018

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Lima, Peru, October 29, 2018 - Cementos Pacasmayo SAA and subsidiaries (NYSE: CPAC; BVL: CPACASC1) ("the Company" or "Pacasmayo") a leading company in the growing cement industry in Peru, announces its consolidated results for the third quarter ("3Q18") and nine months ("9M18") ended September 30, 2018. These results are reported on a consolidated basis in accordance with the International Financial Reporting Standards (IFRS) and are expressed in nominal Peruvian Soles. .

Outstanding Financial Results for 3Q18:

(All comparisons are against 3Q17, unless otherwise indicated)

· The sales volume of cement, concrete and prefabricated products increased by 1.9%, mainly due to a recovery in the self-construction segment, as well as higher sales to small and medium-sized companies.

· Revenues decreased by 4.4%, mainly due to a change in the mix of products sold and a slight decrease in prices.

· Cement EBITDA margin of 31.9%, in line with 3Q17 and 1.6 percentage points higher compared to 2Q18.

· Net Income of S / 33.4 million, a decrease of 13.5% mainly due to lower operating profit due to an increase in the price of coal and other raw materials, as well as a change in the mix of products sold.

Outstanding Financial Results of 9M18:

(All comparisons are against 9M17, unless otherwise indicated)

· The sales volume of cement, concrete and prefabricated products increased by 3.8%, mainly due to higher sales to medium-sized companies, the self-construction sector and the public sector.

· Revenues increased by 3.1%, mainly due to an increase in sales volume described above.

· Cement EBITDA margin of 30.8%, 0.6 percentage points higher mainly due to operating efficiencies.

· Net Income of S / 86.7 million, an increase of 6.4% mainly due to higher operating income.

Management Comment

During this quarter, we have seen a recovery in the growth of the volume of cement sales, which leads us to believe that the results at the end of the year should meet our expectations. As mentioned in the previous quarter, the self-construction segment experienced lower than expected growth rates in May, June and July due to the low construction levels during the World Cup. Fortunately, we have seen the reversal of this trend during this quarter, with volumes that grew again year-over-year, despite a difficult comparable base, since in the third quarter of 2017, volumes were particularly high after recovering after Coastal Child Sequentially, volumes increased by 14.3% in 3Q18 compared to 2Q18, showing a significant recovery and a very positive trend.

We continue to show our capacity to generate efficiencies, since the EBITDA margin recovered this quarter and returned to levels of almost 32%. This is a significant achievement, since we were able to compensate for a slight decrease in revenues with a decrease in operating expenses, reiterating our commitment to generating value and operational excellence.

This quarter we have begun to see some tangible results derived from our strategy and long-term vision as a company of constructive solutions. We built an important concrete pavement road, Sanchez Cerro Avenue located in Piura. This pavement is 1.7 kilometers long and is one of the many that we plan to build in the future, while we work hard to educate authorities and users about the benefits of concrete roads, especially in areas prone to heavy rains and floods. We already have three additional roads in Piura, either in execution or very close to it, with a total of 13 additional kilometers: Avenida Chulucanas and Avenida Santisteban, which are already underway, and Avenida Bayovar, which should begin to run in the next few months. In addition, we have launched a new line of dry products, ready to use, based on cement, called "Rapimix". This line of products will address both housing needs in the self-construction segment and the needs of construction companies in the industrial segment.

It is worth mentioning that the concrete business has had an excellent performance during this year, with a 19% increase in sales to September, compared to the same period of the previous year, and a positive sequential trend, since the volumes They have steadily increased quarter by quarter. We expect this trend to continue, both because of our proactive efforts to expand our customer base, serving small and medium businesses, as well as the expectation that more infrastructure projects will be awarded during the next year. We expect the airports of Piura and Chiclayo to start running during 2019, as well as the Chimbote Bypass. In addition, the execution of reconstruction work should be accelerated next year, and we are actively working not only on the provision of cement for these projects, but also on using this opportunity to provide as much of our new construction solutions products as possible.

In summary, we have continued to demonstrate our commitment to operational excellence and have actively fulfilled our long-term growth plans as a constructive solutions company, which we firmly believe will generate the most value for our stakeholders.

Access the full statement here .

This press release was published in English using an automated translation system