Cementos Pacasmayo S.A.A.

Since we're in a listen-only mode, and 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 you, your host for today's call, Ms. Claudia Bustamante, Investor Relations Manager. Ms. Bustamante, you may begin.

Thank you, Melinda. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer, and Mr. Manuel Ferreiros, our Chief Financial Officer. Mr. Nadal will begin our call with an overview of the quarter, especially our response to COVID-19 and our strategic outlook for the short and medium term. Mr. Ferreiros 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. We hope all of you and your families continue to stay safe in these very difficult times. We are all joining from different parts, different locations, so let's hope that everything works from a technological side. As you probably know, the Peruvian government continued extending the lockdown and state of emergency intended to last two weeks at first for a total of almost three and a half months that ended June 30. Economic activity started gradually since mid-May with 26 activities related to mining, industry and construction services, tourism and commerce. We started producing and shipping cement May 20th, always with the health and safety of our employees at our undisputed top priority. We continue to operate with as little workers as possible in our plants and those that have to go follow strict guidelines for social distancing, hygiene and regular checkups by our health and safety team. All of our administrative staff continues to work from home, and we plan to continue working this way until we are certain that the benefits of returning to the office outweigh the risks. Before moving on to the results of our return to operations, I would like to highlight our actions to fight against the spread of COVID-19. We have acted on four different fronts, and we have acted strongly. First, in terms of health-related initiatives, we have implemented traditional program to help our workers with BMIs above 30. This program has been very successful, and after two and a half months, almost 70% are already below 30. We continue to work with the other 30% and also closely monitor all of them so they are able to maintain these healthy levels. We have also provided all of our workers with access to online doctor's appointments so they don't have to leave their houses unless strictly necessary. Safety kits, including face masks, are alcohol and soap, and psychological and emotional support have also been provided. We have also donated taste tickets to our communities and local authorities. Second, in terms of goods, we have donated food to communities in our area of influence benefiting over 1,800 families. Third, through our volunteering program, we have helped with the disinfection of streets in some of our areas of influence. We filled our mixer trucks with water and disinfectant, and thanks to our almost 80 volunteers, we were able to clean and disinfect more than 17 kilometers of roads. Finally, communication is also very important. In the first weeks of a state of emergency, in some areas of the country, including the north, there was some lack of information on the severity of the pandemic and the true importance of staying home to prevent the spread. We repaired radio and TV spots to help inform... on the population and we believe it was a very successful strategy. We firmly believe on building a better future together and now is the time to show our support to our workers, the families, our communities in our area of influence and those less fortunate during these difficult times. Also, in conjunction with Oxal Mining, we have developed and we take many different programs to aid our people in these difficult times. Moving on to our results, since the start of operations, We have been pleasantly surprised by the cement demand behavior. We had expected the self-construction segment to suffer significantly due to the lockdown, but this was not the case, and it has once again proven its resilience. This segment is generally tied to employment, that in the north is most agriculture, which has had a good year, so it was less affected than in other areas of the country. We are this to the size of the informal sector in the north, which did not quite stop during the lockdown, we can see why the recovery has been faster than expected. Our sales of bagged cement during June were only around 20% below the same period of the previous year, which was a record year, as you may recall. And July sales have continued increasing and look extremely promising, leading us to project that sales could be close to those in 2019. Nonetheless, the effect of over two months of not selling any cement will definitely burden our end of year results, even if this fast and expected recovery consolidates in the next month. Another reason to be very optimistic about the second half of 2020 and all over 2021 is the agreement signed between the Peruvian and the British government to accelerate the execution of the reconstruction plan after El Niño in 2017. The agreement involves the execution of 7 billion solis over the first two years, during which the UK government will provide technical assistance for the construction of hospitals, schools, and river defences, all of which should be finished by June 2022. These are excellent news for the northern region, since the matching infrastructure will finally be built in the best way, hopefully in the most efficient manner. Finally, I would like to take a moment to briefly explain our most relevant digital initiatives. since they have become even more relevant in today's context. As you have mentioned before, since 2018, when we launched our new vision, we identified digital transformation as one of the key axes to articulate our strategy. Since then, we have worked on a variety of tools and projects to digitalize our processes and our relationship with our consumers. We have developed a platform for registration, control, and follow-up, of the different types of discounts and promotions, granting a new digital experience to our client, a great UX, with the required speed and access to information. Another very important digital tool on the operational side of the business is one that allows for online control of the main production variables, such as quality, energy, and consumption of components and resources. It has real-time information, but also keeps historical records of each production variable, giving us the capacity to use it for operational intelligence, as well as predictive analysis. This is complemented by a platform that digitalizes our production team's field work and is managed through mobile devices. One of the most relevant initiatives that has been one to digitalize our relationship with construction companies of all sizes through Pacasmayo Profesional, allowing them to program the requirements and track the shipments online. It integrates all of our back office platforms for an optimal customer service experience This tool allows for the planning and programming of the fleet with efficiency algorithms to optimize the resources such as mixers, pumps, and drivers, according to the client's requirements. All of these and other tools were already in planning or execution. The pandemic only led us to accelerate the development and implementation. We are firmly convinced that the fact that we have already identified these opportunities and have started working decisively on these initiatives has been a key point in our quick adaptation to the new market conditions. Finally, I want to emphasize, I want to overemphasize that we remain fully focused on our long-term goals and are very pleased to have already seen some recovery in sales. We are convinced that the work we have done during the past years in terms of long-term strategy and vision, as well as the quick adaptation during the long-term period, puts us in an incredibly strong position to capitalize on the opportunities ahead and keep helping our country move ahead. I will now turn the discussion over to Manuel to go into more detail on our financial performance. Manuel.