Cementos Pacasmayo’s Q1 2025 Results Signal Resilience in Peru’s Building Boom

Cementos Pacasmayo S.A.A., Peru’s leading construction materials producer, has reported a modest but steady start to 2025, with its first-quarter financial results highlighting both the opportunities and challenges facing the company amid a dynamic Peruvian economy.

The company’s sales volume for cement, concrete, and precast products rose 4.1% year-over-year, driven by stronger demand for bagged cement and ready-mix concrete. This growth aligns with a broader uptick in Peru’s construction sector, which remains a key driver of economic activity.

Revenue and Profitability Trends
Total revenues increased 4.8% to S/500 million (approximately $123 million USD), reflecting the volume gains and pricing discipline. However, the company’s EBITDA margin dipped 0.9 percentage points to 27%, despite a 1.4% rise in EBITDA to S/134.7 million. This margin compression suggests rising input costs or operational inefficiencies, though the 6.5% jump in net income to S/52.7 million—driven by lower financing costs—offset some of the pressure.

The decline in EBITDA margin is a minor red flag. While the company has managed to grow top-line metrics, sustaining profitability will require closer scrutiny of cost structures. For instance, energy prices or raw material costs could be contributing factors, especially in an economy where inflation remains a concern.

Industry Context and Competitive Position
Peru’s construction sector has been a consistent growth engine, supported by government infrastructure projects and private real estate development. Cementos Pacasmayo’s dominance in this space is clear, but it also faces competition from regional players like Cementos Antillas and global firms. The company’s diversification into quicklime production for the mining industry—a segment growing alongside Peru’s resource extraction sector—provides a valuable buffer against construction-sector volatility.

The company’s Q1 results also contrast with its performance in 2024. For instance, net income in Q4 2024 was S/50.08 million, so the Q1 2025 increase to S/52.7 million reflects sequential improvement. This suggests the company is benefiting from seasonal tailwinds, as construction activity typically picks up in Peru’s dry season (May to November).

Investor Takeaways
1. Top-line growth is on track: The 4.8% revenue rise matches expectations for a construction-driven economy, but the margin dip raises questions about cost controls.
2. Debt management is paying off: Lower financing costs contributed to the net income jump, indicating effective capital allocation.
3. Diversification is a strength: Quicklime sales to mining firms offer a steady revenue stream, reducing reliance on construction alone.

Looking ahead, the company’s ability to navigate Peru’s economic landscape will be critical. The Peruvian government’s infrastructure plans—such as the $13 billion investment in roads and ports through 2026—should support construction demand. However, inflation, political uncertainty, and global commodity price swings (impacting mining) pose risks.

Conclusion
Cementos Pacasmayo’s Q1 results underscore its resilience in a challenging but growing market. While margin pressures are a concern, the company’s revenue and profit growth, coupled with its strategic diversification, suggest it remains well-positioned to capitalize on Peru’s construction boom. Investors should monitor EBITDA margin trends closely, but the stock’s 12-month forward P/E ratio of ~10x (vs. a sector average of ~12x) implies a valuation discount that may reflect these risks. For now, the company’s fundamentals align with a “hold” rating, with upside potential if margin stability returns.

The path forward hinges on execution: Can Pacasmayo maintain cost discipline while expanding into high-growth areas like precast materials and mining supplies? The answer will determine whether this Peruvian cement giant continues to cement its leadership.