Cementos Pacasmayo S.A.A.

Good morning, everyone, and welcome to the Cementos Pagas Mayo first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ms. Claudia Bustamante, Investor Relations. Claudia, you may begin.

Thank you, Jenny. 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 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 findings. With that, I now would like to turn the call over to Mr. Humberto Nadal.

Thank you, Claudia. Welcome, everyone, to today's conference call, and thank you for joining us today. This quarter, we have to face the challenge of inclement weather. As you probably already know, Green March, our country, and specifically the northern region, were deeply affected by a cyclone. This is an extremely rare occurrence that left many without a home or livelihood. So I would first like to take a moment to extend our deepest sense of solidarity with them and the families, and to promise that as a company, we will always continue helping as much as possible. Cyclone Yaku mainly affected the regions of Tumbes, Piura, Lambayeque, and Libertad. This phenomenon and the rainy season in general have led so far economic losses estimated at $4 billion. Our sales this quarter were understandably affected by this event temporarily, mainly during March, when sales volume decreased by 23% as compared to the same period of 2022. Nonetheless, Due to proper cost management and the decrease in the use of imported clinker, we were still able to increase our EBITDA margin by almost 1% point, reaching 25.1%. I would like now to focus first on our capacity to respond, like in other occasions, to a crisis like this, and then to focus on the future and how we can all make sure that we are better prepared for the next time this happens. As soon as we realized that the amount of rain, especially in the Pacasmayo area, which is not usually as vulnerable to flooding, was going to have severe consequences, we promptly, I would say immediately, deployed our crisis management plan. This plan addresses the effects of climate-related events through a strategy that involves immediate action in coordination with local authorities and neighborhood councils in our areas of influence. The first step in this plan is to pump the water out And we used our mixer trucks to store this water. Once everything was dry, we had to remove any solid waste to clear the way for proper transit and to prevent diseases. Only then, and let me stress this, only then could we provide clean drinking water. In many areas of our country, the sewage system is still undeveloped. And when floods and landslides occur, there's a possibility of collapse, posing a very alarming safety threat. We can say we successfully focused on preventing this from happening and could then move on to sanitizing the streets. Luckily, our experience during COVID was extremely valuable here, as we had already sanitized streets using our own mixer trucks. We believe that our crisis plan worked and we were able to mitigate and reduce the risks in an effective manner. Now that the immediate crisis has, for the time being, subsided, we need to focus on prevention straightaway. so that we can be certain that when another weather-related disaster comes, we are better prepared than this time. Although there has been much ill talk about the inefficiency of the reconstruction plan called , the reality is really different. And the reality is that part of this plan has in fact been successfully executed, although much slower than initially proposed. The reconstruction plan included hospitals, schools, and preventive works such as dams, river defences and drainage systems. The schools and hospitals have been built and were very needed. Now, the preventive works are pending. Given the current state of construction in the north and considering there is a possibility that a niño may happen soon, these preventive works have to be prioritised. Pacasmayo has plenty of evidence to support that building with the proper materials and designing correctly makes a world of difference in terms of resilience. We have designed and built using the Infrastructure for Taxes Scheme part of the Avenida Vallobar, the Avenida Sánchez Cerro, and the Avenida José de Lama, all of them in Piura. These roads were built using concrete and designed after an extremely careful analysis of the type of soil and in order to endure the potential natural disaster, including proper drainage. The results speak for themselves. These roads have endured the recent heavy rains without any important damage and much better than any other alternative. We need to insist on the importance of building resilient infrastructure since extreme climate patterns will continue and we need to make sure that as a country we are prepared to face it. This has been indeed a different quarter. I will now turn the call over to Manuel to go into more detailed financial analysis.