Cementos Pacasmayo S.A.A.

Good day, ladies and gentlemen, and welcome to the Cementos Pascamayo Third Quarter 2021 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host for today, Claudia Bustamante. Ma'am, the floor is yours.

Thank you, Kate. 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, focusing primarily on 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 file. With that, I'd now like to turn the call over to Mr. .

Thank you, Claudia. Welcome, everyone, to today's conference call. This quarter's immense achievements continue this very strong trend reaching record revenues levels. Self-construction is still the main driver of this growth, but concrete sales have increased significantly this quarter. Year-on-year growth of concrete sales was 73%, with a very solid margin of 12%. When looking at quarter-on-quarter results, there is still substantial growth of 21.2%. Furthermore, if we look at margins, there has been an outstanding increase of 8.2 percentage points. The main driver of this growth in both volumes and margin comes from the demand from reconstruction-related projects, which should continue at least for the next 18 to 24 months. The exponential growth we have experienced this year could not have been foreseen. If we compare cement shipments year-to-date to the same period of 2019, which I may say was already a record year, the growth rate is almost an incredible 40%. Because of this, for almost a year now, we have been using some imported clinker, along with our own clinker, in order to produce all of the cement that is demanded in our influence by all of our clients. We have successfully used a similar strategy while building our new capacity in Pura around seven years ago. However, current market conditions are different in many ways, making it less profitable today to use imported clinker. Fry prices have gone up significantly, in turn increasing the cost of importing clinker, and experts agree that this situation is unlikely to change in the short to medium term. This situation led us to re-evaluate our current strategy and to think outside the box, since the original plan of investing in a new land for Pacasmayo was too costly and would take too long considering the pressing need. This is why, after careful evaluation, we have decided to invest approximately $70 million to build an additional 600,000 tons of clinker per year capacity, effectively eliminating the need to use imported clinker if demand remains similar to what it is today. We believe this project is the best alternative given current market conditions, since it optimizes our current capacity, making the Pacasmayo plant a more balanced one in terms of clinker cement production capacity, and it delivered results in approximately 18 months, which is much shorter than our original plan, which was closer to 40 months. We are absolutely confident that this investment will be very profitable for the company, and it ratifies our commitment and confidence in the development of the country. Finally, I would like to talk briefly about our new hybrid work model. This pandemic has made us innovative, fast-track processes that were already underway and rethink many others. Most of our administrative staff has been working from home since March 2020. Throughout this period, we have been constantly in touch with our people and their needs. So following these wishes and needs and considering the improvement in COVID-19 numbers and the advance of vaccination process in Peru, We decided to implement the hybrid work model since October. We have carefully, extremely carefully, put in place all of the necessary safety protocols in order to ensure a safe, voluntary return to the office. We believe a work-life balance is crucial to overall well-being and has a direct repercussion on productivity. Happy people come for great results. The social interaction that happens at the office is part of this balance and has been missing for over a year. The purpose of this return is to reconnect, promote our culture, and to generate greater value for our clients and the company. We are aware that there will be much to learn and adjust to during this process, but are confident that it is another step towards our purpose to build together the future we dream of. I will now turn the call over to Manuel for a more detailed analysis of the financial results.