Cementos Pacasmayo S.A.A.

Good day, ladies and gentlemen. Welcome to Pacas Mayo's fourth quarter 2025 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 you to your host for today's call, Mrs. Claudia Bustamante, Investor Relations Managing Director. Mrs. Bustamante, you may begin.

Thank you, Luis. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer, and Ms. Eli Hayashi, 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. Ms. Hayashi 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 filing. With that, I'd now like to turn the call over to Mr. Humberto Naranjo.

Thank you, Claudia. Welcome, everyone, to today's conference, and thank you for joining us today. As I'm sure most, if not all of you, already know by now, on December 16, a significant milestone was achieved with the announcement of an agreement for hosting to acquire Inversiones ASPE, which holds 50.01 percent controlling stake in Cementos-Pacas Mile. The agreed-upon valuation of 5.1 billion soles represents a strong multiple of nine times record EBITDA calculated based on the last of months ending in July 2025. This transaction is pending regulatory approvals and is expected to close in the upcoming months. However, much more relevant than this final evaluation is the fact that both teams' decision serves as a powerful endorsement of Pacasmayo's long-term strategy, its operational excellence, and the consistent hard work delivered by generations of employees over nearly seven decades. This milestone underscores the strength of our team, our commitment to our values, and our dedication to building a profitable, ethical, world-class company with a clear sense of purpose. We are immensely proud of the global leadership which we have admired for so long and placed its trust in Pakistan and in Peru. Moving forward, we will collaborate to promote sustainable development, create new opportunities, and contribute to the growth of both the country and the wider region. That being said, I would like now to move on to a quick overview of our results for the quarter and for full year 2025. We continue to see very strong momentum in sales volumes with an 8.2% increase this quarter compared to the same period of last year and a very solid 7.2% increase for full year 2025 relative to 2024. This growth was driven mainly by stronger demand for infrastructure projects and a very consistent performance in the always reliable self-construction segments. Our excellent financial performance this quarter was given by disciplined execution and a relentless focus on cost efficiencies. Excluding the one-off expenses related to the Share Purchase Agreement signed with Holcim, EBITDA REIT reached 158.7 million and 11.4% increase compared to the same period last year. This growth confirms the success of our efforts to permanently enhance profitability across our market. This strong quarter cut off a record-breaking year once again, as we have done in 2024. We achieved a no-time high EBITDA of $594.2 million solid for a full year, marking a 6.4-year-over-year increase when excluding one-off expenses. Children with our commitment to operational excellence and climate action were continuously making progress in de-urbanizing operations. We are proud to announce that we have achieved three-star recognition from Peru's Minister of Environment, Minan, to the Peru Carbon Footprint Task Force. This recognition is awarded for demonstrating consecutive years of reduced greenhouse gas emissions, and it followed a collaborative effort with Minan, including the submission of verified data for the 2022-2024 period. Specifically, our Rioja plant recently earned its third star for 2024 emission reductions, building upon the recognition previously secured by both our Pacas Mayu and Priva plants for the 2023 performance. In the same spirit, we are very pleased to highlight our continued leadership in the medical ESG responsibility ranking. For the 10th consecutive year, we are recognized as the industry leader in this evaluation, which assesses the three dimensions of sustainability, environment, society of customers, and ethics and corporate governance. Furthermore, we maintain a top-tier position in the general ranking of the most responsible companies in Peru, placing ninth overall this year, which is a tremendous achievement for a regional company like ours. This recognition strongly reinforces our commitment to a sustainability strategy, which remains central to our core business operations. We are confident that these positive results are only the beginning, that the momentum we've built will continue to strengthen the future. At the same time, the confidence placed in us by such a prestigious global cement player reinforces our focus on operational excellence, profitability, disciplined execution, and always people at the center of every strategy. We're confident that the momentum we have built is There, I will remain motivated to keep improving our performance while continue to serve our clients, support our communities, and most of all, always contribute to the development of our country. I will now turn the call over to Ellie, our CFO, to go into a more detailed financial analysis. Ellie?

Thank you, Humberto, and good morning, everyone. For the first quarter of 2025, revenues increased by 6.2% year-over-year, reaching 559.5 million subjects. This growth was primarily driven by higher sales of tax amendments along with increased sales of concrete and pavement for infrastructure projects. We delivered a strong profitability this quarter. With growth, profits increased 11.4% year-over-year. This improvement was mainly due to a lower cost of raw material, greater consumption of our own timber, and operational efficiency resulting from our maintenance and production plants. Consolidated EBITDA excluding transactional expenses also rose by 11.4% to $158.7 million. Looking at the full year 2025, revenues grew by 7% compared to 2024. Wealth profit increased by 10.8% due to the same factor as the quarter. Lower raw material cost, higher use of our own tinder, and operational efficiency from our production plan. full-year EBITDA after excluding the one-off transactional expenses increased by 6.4% over 2024. Turning now to operating expenses, administrative expenses for the fourth quarter 2025 increased by 5.7% and by 50% for the full year and a corresponding period in 2024. This was mainly contributable to higher personal expenses resulting from collective accounting negotiations from our labor union. Selling expenses decreased by 8.3% in the fourth quarter compared to the previous year, primarily due to lower depreciation and reduced advertising and promotion expenses. However, for the full year 2035, selling expenses increased by 40% driven by higher advertising and promotion expenses during the first nine months of the year, as well as the union modules mentioned before. In the first quarter of 2025, cement sales saw a notable increase of 13.6%. This growth was primarily due by robust demand for packed cement within the self-construction sector. Likewise, for the full year 2025, cement sales increased 8.7% when compared to 2024. This elevated demand is linked to the continued strength of the agro-industrial and fishing sector, which are key income drivers in the North. Regarding profitability, the gross margin increased by 0.4 percentage points in the fourth quarter of 2025 compared to the fourth quarter of 2024. Over the full year, gross margin increased by 1.9 percentage points versus 2024. These margin improvements are mainly attributable to a reduction in raw material costs and lower consumption of imported single. During this quarter, concrete, pavement, and mortar sales decreased by 25.1% year-over-year. This decline was mainly due to lower sales volume, as a more super-river-run defensive project was put on standby. We know, however, that this project has been prioritized to respond in the near future. Conversely, for the full year 2025, sales increased by 6.3%, mainly due to higher volume of mortar and concrete for infrastructure projects. Gross margin decreased by 7.8 percentage points in the fourth quarter of 2025 and 3.2 percentage points for the full year. This contraction was primarily due to the execution of the Buda Airport project and lower quiz cost dilution resulted from the halt of the Fort Hooker project. During 2025, sales of concrete, pavement, and mortar increased 6.3 percentage, mainly due to higher sales volume of mortar and concrete for infrastructure projects. Grossmeier's margin decreased 7.8 percentage points in the fourth quarter of 25 compared to the fourth quarter of 2024 and 3.8 percentage points in compared to 2024. This decrease was mainly due to the execution of the Plura Airport project, as well as lower delusions of its cost from the Homes and Pursuit Project as mentioned before. Regarding precast materials, sales decreased by 16%. in the fourth quarter compared to the fourth quarter of 2024, mainly due to lower sales volume and a high comparative base in the fourth quarter of 2024 from a road improvement project. However, full-year 2025 sales increased by 3% by higher demand from the public sector. Growth margins improved by 5.4 percentage points in the fourth quarter of 2025 and 1.7 percentage points in 2025. largely due to relative pricing and higher dilution of fixed costs. Consolidated net income for the quarter was negative due to a transaction of expenses mentioned before. Excluding this one of expenses, net income would have been $59.8 million solid, making a 19.6% increase over the same period last year. Similarly, for full-year 2035 net income, including the expenses would have been $231.8 million solid, an increase of 16.5% compared to 2024. Our net debt to EBITDA ratio stood at 2.8 times. We continued to lower our debt through amortization payments, although it was partially offset by a lower EBITDA figure. To summarize, we continued to deliver solid financial results this quarter by capitalizing on favorable market conditions diligently managing costs to achieve sustained profitability. Operators, can we now open the call for questions?

Thank you very much. We'll now move to the Q&A part of the call. If you'd like to ask a question and you're connected from the phone, please press star 2. It is star 2 if you're connected from the phone. And if you're connected from the web, you can ask a voice or send a text question as well. So we'll just give it a few moments for the questions to come in. Okay, so our first question is from Johan Clavijo from Sego Capital. Thank you for the call. Could you please provide more details about the transaction with Ultim? Which steps are pending to close the transaction? Is there any risk we should be aware of? And how do you feel about the regulatory approvals for the deal? Thank you.

Thank you. Like I explained, the transaction has really acquired who controls 50.01% of the common shares of Pacasmayo. We are waiting for the copy approval. The process is running smooth, and we expect it to be approved in the coming months. That's all we can comment at this point, but we don't see anything coming up.

Thank you. Our next question is from from Credit Corp. Thanks for the presentation. Please, could you explain why acquisition-related expenses are assumed by Pacas Mayo and why are they so high?

Yes. We, I mean, most of the acquisition expenses are related to change of control issues. that were, I mean, controls that were in the company for a very long time. Part of these transaction expenses will be by . All of this was approved by our board. And we considered, I mean, given the price achieved by the, for the shares of the company, this was very reasonable and had to do with contractual obligations . And like I said, part of these expenses will be assumed by will be deducted from the price.

Thank you very much. Our next question is from Gerard Fort from IFP Integra. Could you help us understand why Pacasmaio had to recognize the 77 to 80 million soles in expenses related to the Holcim transaction, considering that Holcim is acquiring ASPI's majority stake, not the company itself? and the deal is still pending in the COPPE approval. What are the obligations required by COSMIO to incur these costs?

And like I said, this was discussed in the board and what decided to be done like this. We don't foresee any impediments by the authority. I mean, we're very respectful of all the legal framework and we think this will be approved. And this was a decision that, like I said, this has to do with contacts that were already in place for many, many years that had to do with the change of control.

Thank you very much.

And if I may add, and we have, we should realize, I mean, as we are all aware, after this transaction of buying a fee, HOSIM is required by law to launch an OPA for part of the remaining shares. So we consider, the board considers this a transaction that will benefit all shareholders. It's not only the controlling shareholders. And the price has to be at least the price that was paid for the controlling shares.

Thank you. Just a reminder, if you'd like to ask a question, it's star two. If you're connected from the phone, if you're connected from the web, you can ask a voice or send a text question. We'll give it a few more moments for any further questions. Okay, we have a question from Gabriel Ramos from Kaupa. Given the pause of the Matupe Riverbank protection project and its impact on volumes and margins in the fourth quarter of 2025, should we expect similar project-related disruptions or margin pressures in the coming quarters? Additionally, how could this affect concrete, pavement, and mortar performance and overall margins looking into 2026?

I think margins, I mean, every concrete project has its particular reality. Margins looking forward, we think the data margins should remain at the levels we have achieved over the last year, maybe a little bit higher. We have some energy saving projects coming in the second quarter, on the second semester of this year, that should enhance margins. So we have a very positive outlook in what's going to happen in the coming, in this year with the margins. And also, we have to, we hope that the authorities usually start spending slower at the beginning of the year. We have elections coming up in two months. I mean, this would probably pick up after the second quarter of this year.

Thank you. We have a follow-up from Gerard Fort from IFP Integra. Could you provide any guidance on revenue growth and EBITDA margins expected for 2026?

Well, we can see, I mean, we achieved a record a bit a year on 2025, and we perceive that this year should be stronger than the last one in terms of volumes. We also think our price will remain in a very competitive state as they have been giving us a very good margin. So the results coming going forward, we are optimistic about the volume growth for the year. And we are also very optimistic that the beta margins will remain stable by pointing towards an increase due to some efficiencies, like I mentioned, energy among them in the second quarter of this year.

Okay, thank you very much. We would like to thank everyone for the questions and the participation. I'll now hand it to Humberto for the closing remarks.

Thank you. We are deeply, deeply proud that a global leader such as Holcim has placed its trust in Pacasmayo and more importantly in Peru. This investment is a very strong validation of what we have long believed and consistently communicated, that Peru's long-term growth potential remains solid, and that the country offers meaningful opportunities for sustainable development and . I think a few of these are consequences of the effort displayed by thousands of employees over years, and we are all extremely proud of this transaction, and I'm sure this will bring only good news for all stakeholders. the shareholders, the employees, our communities and the country. Thank you everybody for today and always thank you for your interest in our company. Have a very nice day.

We will now be closing all the lines. Thank you and have a nice day.