Cementos Pacasmayo S.A.A.

Good day, ladies and gentlemen, and welcome to Pacus Mayo's first quarter 2022 earnings conference call. At this time, all participants are 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 your host for today's call, Mrs. Claudia Bustamante, Investor Relations Manager. Mrs. Bustamante, you may begin.

Thank you, Paul. 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 the call includes certain forward-looking statements. These statements relate to expectations, beliefs, projections, and 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 now would like to turn the call over to you.

Thank you, Claudia. Welcome, everyone, to today's conference call, and thank you for joining us today. This quarter's results prove once more the resilience of the Peruvian cement industry, which is operating in the face of great uncertainty, both at the local and international levels. Pacasmayo has been able to reach an outstanding 13% increase in revenues and an even more substantial 21.3% increase in EBITDA this quarter, when compared to the same period in 2021, which was already a very strong quarter, despite the difficult environment in which we had to operate. As you all know, the current conflict between Russia and Ukraine has generated, among other things, an energy shortage, resulting in increased prices of oil, coal, and gas. Coal prices have a direct and relevant effect on cement productions, since it is one of the main raw materials used in clinker production. Although we use mostly anthracite gold, which is sourced locally and is ordinarily not exported because of its lower calorific value, the exponential increase in international prices of bituminous gold has also had a repercussion on the price of this gold. Fortunately, our strategy approach of holding enough inventory of bituminous gold for around a year-long supply of our key raw materials has allowed us to balance the use of more expensive coal with the one we had in stock, and therefore mitigate the pressure on our margins. We're also able to offset this cost pressure and actually improve our cement gross margin by 3.7 percentage points, due to our reduction in the use of imported clinker, partly due to a slight decrease in sales volumes, but most importantly, because of the optimization of our kiln imperial, You must know that in the first quarter, the skill was able to produce above its nominal capacity because of repairs made to the pole green at the beginning of the year, as well as implementation of improvements identified by a consultant firm that inspected the plant at the end of last year. These efforts to optimize our own clean air capacity have delivered excellent results, which we hope we can maintain in the upcoming quarters. At the local level, even though the constant political noise has become part of our daily routine, the recent nationwide strike by transportation and agriculture workers did have an effect on our results, since it affected our ability to dispatch cement during the days the strike took place. Currently, the production of las bambas, one of the largest copper mines in the country, has been halted due to the unresolved issues between local communities and the company, and the government's complete inability to mediate favorably in the negotiations. This has already cost our country a loss of $110 million in copper exports and an estimated $62.5 million in mining royalties. Furthermore, the current proposal by the government to change the Constitution, mainly the changes in economic chapter, have added once more to the feeling of uncertainty and loss of confidence, having a direct effect on private investment. The expectation is for pilot investment to decrease around 4% of this year. Although this may not have an immediate effect on our results, it will definitely have a medium to long-term effect unless it is reverted. 2022 marks a substantial milestone for Pacasmayo, as it's a 10-year anniversary for our listing in the New York Stock Exchange. We believe we have come a very long way since February 2012 when we took the polls and courageous decision to expand our horizons and commit ourselves to the highest standard of transparency and corporate governance. During the last decade, Pacasmayo did its first international bond issue in 2013, a greenfield plant expansion in Pura in 2016, and a significant change in strategy in 2017, when we once again boldly decided to go beyond sending cement to become a building solutions provider. We also became the first Peruvian cement company to be included on the Dow Jones Sustainability Index in 2019, one of only two Peruvian companies to be included in a sustainability yearbook in 2020, earning also the industry moving status that year, as a company with the most improvement year over year. We can proudly say that we have achieved our objective of being able to compare ourselves with the most important cement companies in the world, despite our relatively small size. But the most valuable thing we can grasp from these past 10 years is that this is a constant and unstoppable learning process, and that the ability to adapt quickly and efficiently will always be our most important quality. Finally, I'd like to reiterate that despite the headwinds, we will always, and I want to stress always, strive to continue delivering the best possible results by focusing on what we know best, knowing our customers' needs, and thinking outside the box and constantly, permanently, pushing our limits to satisfy them in the most beneficial way for our business and our shareholders. Our almost 65 years of operating history have taught us that difficult times will come and go, but our resilience stems from the confidence that having solid values has given us, and we will continue to push us to stand tall and improve ourselves in all aspects of our business. We have a permanent and undivided confidence in our country. I will now turn the call over to Manuel to go into a more detailed financial analysis.