Cementos Pacasmayo's Q3 2025 Earnings Call: Conflicting Signals on Volume Growth, CapEx, Electoral Impact, and Market Share Strategies

Date of Call: October 29, 2025

Financials Results

• Revenue: PEN 574.1M, up 10.9% YOY

Guidance:

• Volumes expected to remain strong for the remainder of 2025 and management is optimistic about growth in 2026.
• Margins expected to remain steady into the coming year despite volume growth.
• Sustaining CapEx to remain around PEN 100 million annually (recent trend).
• Marketing/promotional spend to be maintained as needed to defend market share.
• Board maintained dividends at PEN 190 million; company focused on continued deleveraging (net debt/EBITDA ~2.5x).

Business Commentary:

* Volume and Sales Growth: - Cementos Pacasmayo S.A.A. reported a 9% increase in sales volume compared to the same period last year, with gross profit increasing by 14.4%. - The growth was driven by stronger demand from infrastructure projects and consistent performance in the Self-construction segment.

• Financial Performance and Profitability:
• The company's consolidated EBITDA in Q3 was PEN 160.6 million, a 3.9% increase year-on-year.

• This was primarily due to increased operating income, lower interest payments, and a favorable foreign exchange rate effect, contributing to improved profitability.

• Innovation and Strategic Initiatives:

• The company is at the forefront of advancing innovative building solutions, such as a langard that integrates prefabrication and B-methodology.

• This is driven by a client-centric view and alignment with the company's purpose, as seen in collaborations with Newmont and Bechtel Corporation on water treatment projects.

• Market Conditions and Outlook:

• The company does not foresee a significant impact from upcoming elections, with regional governments encouraged to spend their remaining budgets.
• This maintains the company's optimistic outlook on volumes and margins for the remainder of the year and into 2026.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 10.9% revenue growth (PEN 574.1M), net income up 14.4% to PEN 71.5M, EBITDA improvement and a net debt/EBITDA of 2.5x; CEO: “we're confident that these positive results are only the beginning” and expressed optimism for 2026.

Q&A:

• Question from Marcelo Palhares (Itaú Corretora de Valores S.A., Research Division): For volumes you mentioned accommodation until April 2026 ahead of the federal elections — what to expect for cement volumes in the country and for the company, and what about post‑election? Also capital allocation questions.
  Response: Volumes should remain strong — northern region growing above national average and infrastructure/self‑construction demand is holding; management does not expect elections to materially disrupt activity.

• Question from Marcelo Palhares (Itaú Corretora de Valores S.A., Research Division): Follow up on CapEx deployments to date and expectations for 2026; and can we expect similar dividend levels in 2026 as the dividend announced in October?
  Response: Sustaining CapEx to stay around PEN 100M annually; Board held dividends at PEN 190M to balance shareholder return and continued debt reduction.

• Question from Cesar (text): Considering electoral cycles often pause private investment and shift public spending priorities, how are you adjusting commercial and operational strategy to sustain volumes and margins if project execution slows; any opportunity to gain market share if competitors reduce activity?
  Response: Management disagrees elections will pause activity, will maintain marketing to defend share and continue investing—opportunities exist but they will keep competing rather than pause.

• Question from Giovanni Sánchez (Prima AFP) (text): Could you explain the extraordinary increase in financial income to PEN 8.7 million in 3Q25?
  Response: The PEN 8.7M rise in financial income was due to an extraordinary income related to mining royalties resolution (a long‑running item) recognized this quarter.

• Question from Mariane Goñi (CrediCorp Capital) (text): Any guidance on margins for 2026 and the trajectory of SG&A/marketing — will you maintain this level of marketing and promotional spending into next year?
  Response: Margins expected to remain steady into 2026; marketing spend increased to defend market share and will be kept at similar levels as long as it proves effective; higher admin expenses reflect a union bonus that will taper.

Contradiction Point 1

Cement Volume Growth Expectations

It involves differing expectations for cement volume growth, which directly impacts revenue projections and market positioning.

What are the expected cement volume trends in the country before federal elections in April 2026? What are the expected cement volume trends after the elections? - Marcelo Palhares (Itaú Corretora de Valores S.A., Research Division)

2025Q3: Volume growth for the remainder of the year is expected to be strong, with projects like Yanacocha and Tarata continuing. - Humberto Reynaldo Nadal Del Carpio(CEO)

What are your expectations for future volumes, particularly regarding the mid- to high single-digit increase in Pacasmayo? Can you provide an update on CapEx? - Marcelo Sá (Itaú Corretora de Valores S.A., Research Division)

2025Q2: In terms of volumes, we think the trend will remain single high digits for the second part of the year. - Humberto Reynaldo Nadal Del Carpio(CEO)

Contradiction Point 2

Capital Expenditure (CapEx) Strategy

It involves changes in capital expenditure plans, which impact investment decisions and financial management.

What has driven CapEx deployments to date and what are the 2026 expectations? Will 2026 dividend levels match those announced in October 2023? - Marcelo Palhares (Itaú Corretora de Valores S.A., Research Division)

2025Q3: Sustaining CapEx has been around PEN 100 million, except for 2021 when a major project was undertaken. - Humberto Reynaldo Nadal Del Carpio(CEO)

What are your expectations for future volumes, particularly regarding the mid- to high single-digit growth trend in Pacasmayo? Regarding CapEx, what are your plans? - Marcelo Sá (Itaú Corretora de Valores S.A., Research Division)

2025Q2: Our sustaining CapEx is around PEN 100 million every year dedicated to our 3 plants and all our ready-mix plants. - Humberto Reynaldo Nadal Del Carpio(CEO)

Contradiction Point 3

Electoral Impact on Business Operations

It addresses the company's expectations and preparedness to navigate potential disruptions or changes in business operations due to the upcoming elections.

How are you adjusting your strategies to maintain volumes and margins amid potential project delays caused by election-related pauses in private investment and shifts in public spending? Do you see opportunities to gain market share if competitors reduce activity? - Cesar [indiscernible]

2025Q3: Elections do not halt private sector investments, and businesses should continue operating. This perspective is evident in ongoing projects and announcements. - Humberto Reynaldo Nadal Del Carpio(CEO)

Can you maintain 2025 concrete volumes? Are there new infrastructure projects that could boost future concrete volumes? - Gabriel Perez(Credicorp)

2025Q1: The company remains focused on maintaining market share, it does not anticipate significant changes due to elections. - Humberto Nadal(CEO)

Contradiction Point 4

Volume Growth and Market Share Expectations

It involves differing expectations for volume growth and market share stability, which are critical for revenue forecasts and competitive positioning.

What are expected cement volumes in the country until April 2026 before federal elections, and what will they be afterward? - Marcelo Palhares (Itaú Corretora de Valores S.A.)

2025Q3: Volume growth for the remainder of the year is expected to be strong, with projects like Yanacocha and Tarata continuing. The company does not anticipate a significant impact from the upcoming elections, as 80% of the economy remains stable. - Humberto Reynaldo Nadal Del Carpio(CEO)

Can you discuss the positive trends in Q4 sales volumes and 2025 expectations by segment (residential, non-residential, infrastructure)? - Adrian Huerta (JP Morgan)

2024Q4: For us, since 80% of our sales go to self-construction, the key proxy is employment. Residential demand should be positive, driven by favorable agricultural and fishing exports. Infrastructure demand should increase due to new Minister of Economics and government spending. - Humberto Nadal(CEO)