1Q16 Results - Investor Relations

First Quarter 2016
Earnings Release
For more information please visit www.cementospacasmayo.com.pe/investors
or contact:
In Lima:
In New York:
Manuel Ferreyros, CFO
Claudia Bustamante, Head of Investor
Relations
Cementos Pacasmayo
Tel: (511) 317‐6000 ext. 2165
E‐mail: [email protected]
Hugh Collins
MBS Value Partners
Tel: (212) 223-4632
E‐mail: [email protected]
First Quarter 2016
Earnings Release
Cementos Pacasmayo S.A.A. Announces Consolidated
Results for First Quarter 2016
Lima, Peru, April 25, 2016 – Cementos Pacasmayo S.A.A. and subsidiaries (NYSE: CPAC; BVL: CPACASC1) (“the
Company” or “Cementos Pacasmayo”) a leading cement company serving the growing Peruvian construction
industry, announced today its consolidated results for the first quarter (“1Q16”) ended March 31, 2016. These
results have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and are
stated in nominal Peruvian Soles (S/).
Financial and Operational Highlights:
1Q16 Highlights
(All comparisons are to 1Q15, unless otherwise stated)



Volumes of cement, concrete and blocks rose 8.1%
Revenues rose 6.5% to S/ 309 million
Consolidated EBITDA of S/ 85.6 million, down 4.0% due to higher temporary use of imported
clinker because of Piura ramp-up and scheduled maintenance of main kiln in Pacasmayo;

Net income of S/ 27.7 million, compared with S/ 52.3 a year earlier, due to lower gross profit,
non-cash exchange rate effect, Piura plant depreciation effect and financial expenses
previously capitalized as a result of the US$ 300 million debt.
It is important to mention that the normalized consolidated EBITDA excluding non recurrent
events and the temporary use of imported clinker would have been S/. 104 million and an
EBITDA margin of 33.7%.

2
First Quarter 2016
Earnings Release
Financial and Operating Results
1Q16
1Q15
% Var.
Financial and Operating Results
Cement, concrete and blocks sales volume
594.4
550.0
8.1%
Sales of goods
309.6
290.6
6.5%
Gross profit
114.3
125.1
-8.6%
Operating profit
61.4
72.2
-15.0%
Net income
27.7
52.3
-47.0%
Net income of Controlling Interest
28.5
53.2
-46.4%
Consolidated EBITDA
85.6
89.2
-4.0%
Cement EBITDA *
86.9
92.0
-5.5%
Gross Margin
36.9%
43.0%
-6.1 pp.
Operating Margin
19.8%
24.8%
-5.0 pp.
Net income Margin
8.9%
18.0%
-9.1 pp.
Net Income of Controlling Interest Margin
9.2%
18.3%
-9.1 pp.
Consolidated EBITDA Margin
27.6%
30.7%
-3.1 pp.
Cement EBITDA Margin
28.1%
31.7%
-3.6 pp.
In millions of S/.
*Corresponds to EBITDA excluding the Fosfatos del Pacífico and Salmueras Sudamericanas projects
which are not linked to the cement business and are currently in pre-operating stages, therefore they are
not generating revenues.
3
First Quarter 2016
Earnings Release
Management Comments
Our performance during the first quarter shows the quality of our operations, and the improving industry
fundamentals in the northern region of Peru. Cement volumes rose year-on-year, with nearly 20% of total volume
coming from the Piura facility, the most advanced cement plant in Latin America. The ramp-up of the Piura plant
is now almost complete, providing us with greater capacity, lower costs and increased flexibility in logistics.
Financial results for the quarter were lower year-on-year, mainly driven by costs associated with higher clinker
imports to meet growing demand, the non-cash impact of currency movements and extraordinary expenses
related to reducing headcount in the permanent search for higher efficiency. All of these are non recurring
events. Piura began producing clinker mid-way through 1Q, and is now producing at a rate of 2,800 tons per day,
fully eliminating any need to consume imported clinker for the foreseeable future. Additionally, the company
incurred some non-recurring costs as we entered the final stages of the Piura ramp up, and carried out
maintenance at our kiln #3 at the Pacasmayo plant. Leaving all these non recurring events behind, going forward,
we are confident we will maintain a sustainable gross margin in the 40s.
The demand environment in the northern region of Peru shows further signs of improvement. Infrastructure
spending for January and February, the most recent months available, showed double digit growth from 2015.
Our three major projects keep moving along and new projects are now under way such as the city of Olmos and a
wide number of Eolic Parks. On a positive note the concerns over el Niño effects have diminished with the ending
of the summer which had been historically the riskiest season for this phenomenon.
At the national level, the recent presidential election points towards a supportive political environment. Almost
75% of the country has voted in favor of the current economic model: both candidates have business-friendly
policy platforms, and recognize the value of infrastructure spending. This raises the possibility of increased
federal spending on infrastructure at the conclusion of 2016. The self-construction market is also posting positive
growth, with economic growth and political stability supporting spending.
In 2016, we remain focused on our key advantages. The Piura plant has given us increased capacity with greater
levels of efficiency, while the need to consume imported clinker and expenses associated with the ramp-up are
now behind us. Lastly, we are the leader in the northern region of Peru, a market with healthy demand and high
barriers to entry. We are confident that the volume growth will continue to be positive during the year. All of
these factors position us to deliver growth and margin expansion when compared with 2015 results.
4
First Quarter 2016
Earnings Release
Economic Overview for 1Q16:
GDP growth for 1Q16 is estimated at 4%. As we had begun to see by the end of 2015, El Niño proved less intense
than expected, with fewer consequences than expected on the economy in the northern region of Peru. As a
result, public spending continued increasing.
In February, public spending grew 11%, the highest rate in over a year, and specifically the construction of public
works increased 16%. For the northern region, during 2016, most of the growth for the construction sector will
come from the development of major infrastructure projects including the Talara refinery, Chavimochic and the
Longitudinal de la Sierra highway.
15.0
Public Spending
(% increase)
10.0
5.0
0.0
-5.0
-10.0
-15.0
Source: Ministry of Economy, Apoyo Consultoría, BCRP
Presidential elections took place April 10th 2016, and since no candidate obtained more than 50% of the vote the
runoff will be June 5th. The two candidates that will go to the runoff, Keiko Fujimori and Pedro Pablo Kuczynski,
represent business friendly and open-market policies and could guarantee the continuity of the current economic
model, and the ability to undertake reforms to improve the macroeconomic indicators.
5
First Quarter 2016
Earnings Release
Peruvian Cement Industry Overview:
Cement demand in Peru is mainly supplied by Cementos Pacasmayo, UNACEM and Cementos Yura. Cementos
Pacasmayo primarily supplies the northern region of Peru, while UNACEM supplies the central region and
Cementos Yura the southern region.
The northern region of Peru, according to the Instituto Nacional de Estadística e Informática (INEI) and Apoyo
Consultoría, represents approximately 23% of the country’s population and 14% of national Gross Domestic
Product (“GDP”). Despite sustained growth in the last 10 years, Peru continues to have a significant housing
deficit estimated at 1.9 million households throughout the country as per the Ministry of Housing, Construction
and Sanitation.
In Peru, the majority of cement is sold to a highly fragmented consumer base of individuals that tend to gradually
buy bags of cement to build or to improve their homes, a segment the industry refers to as “self-construction”.
Peruvian Cement Market
Shipments by Plant and Market Share
Northern Region (thousands of metric tons)
Plant
C. Pacasmayo
C. Selva
Imports
Total
2012
2,045
200
29
2,274
2013
2,110
240
34
2,384
2014
2,051
296
40
2,387
2015
2,022
288
12
2,322
Jan 2016
LTM
2,042
290
12
2,344
% share
18.2%
2.6%
0.1%
20.9%
2015
5,546
357
507
6,410
Jan 2016
LTM
5,504
361
506
6,371
% share
49.2%
3.2%
4.5%
56.9%
2015
2,480
2,480
11,212
Jan 2016
LTM
2,491
2,491
11,206
% share
22.2%
22.2%
100.0%
Central Region (thousands of metric tons)
Plant
UNACEM
Caliza Inca
Imports
Total
2012
5,315
157
409
5,881
2013
5,612
288
465
6,365
2014
5,701
383
461
6,545
Southern Region (thousands of metric tons)
Plant
Grupo Yura
Total
Total Regions
2012
2,203
2,203
10,358
2013
2,515
2,515
11,264
2014
2,600
2,600
11,532
Source: INEI
6
First Quarter 2016
Earnings Release
Main Infrastructure Projects in the Area of Influence:
Infrastructure spending in 2015 is expected to have totaled around $6 billion, and to be one of the main drivers of
growth for 2016, according to Apoyo Consultoría.
Specifically in the northern region of Peru, where Cementos Pacasmayo is the leading provider of cement, there
are three projects in the execution phase.

Talara Refinery – Cementos Pacasmayo has been contracted to provide cement, concrete and piles for
this project. The Company estimates that as of March 31, 2016, around 48% of the total cement needed
has been shipped.

Chavimochic Project – Small shipments began in 3Q15. As of March 31, 2016, 24% of the total demand
for the project had been shipped.

Longitudinal de la Sierra Highway – Cementos Pacasmayo has been contracted to provide cement and
concrete for this project. As of March 31, 2016, the Company estimates that around 61% of the total
demand for the project has been shipped.
7
First Quarter 2016
Earnings Release
Operating Results:
Production:
Cement Production Volume
(thousands of metric tons)
1Q16
Pacasmayo Plant
Production
1Q15
% Var.
365.0
472.5
-22.8%
Rioja Plant
77.0
70.9
8.6%
Piura plant
120.9
-
N/R
Total
562.9
543.4
3.6%
With the new cement plant in Piura in production, total cement volumes in 1Q16 increased 3.6% compared to
1Q15, mainly due to increased demand.
Cement production volume at the Pacasmayo plant in 1Q16 decreased 22.8% compared to 1Q15, mainly due to
the beginning of cement production in the Piura plant.
Cement production volume at the Rioja Plant increased 8.6% in 1Q16 compared to 1Q15, mainly due to increased
demand.
Clinker Production Volume
(thousands of metric tons)
1Q16
Pacasmayo Plant
Production
1Q15
% Var.
153.2
252.5
-39.3%
Rioja Plant
60.8
63.5
-4.3%
Piura Plant
80.7
-
N/R
294.7
316.0
-6.7%
Total
Clinker production volume at the Pacasmayo plant in 1Q16 decreased 39.3% when compared to 1Q15, mainly
due to scheduled maintenance of our main kiln.
Clinker production volume at the Rioja plant decreased in 1Q16 compared to 1Q15, mainly due to higher
production for inventory purposes during 1Q15.
During 1Q16, 96,518 MT of imported clinker were consumed, 25.3% more than the 77,000 MT used in 1Q15. This
was due to maintenance of the main kiln in Pacasmayo and the use of imported clinker for cement production at
the Piura plant during the ramp-up of the clinker production. The Company ceased importing clinker mid-way
through the first quarter, and does not expect to consume it again for the foreseeable future.
8
First Quarter 2016
Earnings Release
Quicklime Production Volume
(thousands of metric tons)
Production
1Q15
1Q16
Pacasmayo Plant
24.2
26.6
% Var.
-9.0%
Quicklime production volume decreased 9.0% in 1Q16 compared to 1Q15, in line with a decrease in demand.
Installed Capacity:
Installed Cement and Clinker Capacity
Annual installed cement capacity at the Pacasmayo and Rioja plants was stable at 2.9 million MT and 440,000 MT
respectively. As of 4Q15, the annual installed cement capacity at the Piura plant is 1.6 million MT.
The annual installed clinker capacity at the Pacasmayo and Rioja plants remained stable at 1.5 million MT and
280,000 MT respectively. As of 1Q16, the annual installed clinker capacity at the Piura plant is 1.0 million MT.
1
Utilization Rate :
Pacasmayo Plant Utilization Rate
1Q16
Utilization Rate
1Q15
% Var.
Cement
50.3%
65.2%
-14.9 pp.
Clinker
40.9%
67.3%
-26.4 pp.
Quicklime
40.3%
44.3%
-4.0 pp.
The utilization rate of cement production at the Pacasmayo plant decreased 14.9 percentage points in 1Q16
compared to 1Q15, in line with the beginning of production in the Piura plant.
The utilization rate of clinker production in 1Q16 was 26.4 percentage points lower than in 1Q15, mainly due to
maintenance of our main kiln.
Additionally, the utilization rate of quicklime production decreased 4.0 percentage points during 1Q16, compared
with 1Q15, in line with decreased demand.
1
The utilization rates are calculated by dividing production in a given period over nominal installed capacity. The utilization rate implies
annualized production, which is calculated by multiplying real production for each quarter by 4.
9
First Quarter 2016
Earnings Release
Rioja Plant Utilization Rate
Utilization Rate
1Q15
1Q16
% Var.
Cement
70.0%
64.5%
5.5 pp.
Clinker
86.8%
90.7%
-3.9 pp.
The utilization rate of cement production at the Rioja plant was 70.0% in 1Q16, 5.5 percentage points more than
in 1Q15.
The utilization rate of clinker production at the Rioja plant was 86.8% in 1Q16, slightly below 1Q15, mainly due to
production for inventory purposes in 1Q15.
Piura Plant Utilization Rate
1Q16
Cement
Utilization Rate
1Q15
30.2%
-
% Var.
N/R
The utilization rate of cement production at the Piura plant was 30.2% in 1Q16, and will increase once the clinker
production finishes its ramp up period.
New Cement Plant in Piura
During 1Q16 the clinker production at the Piura plant began, marking the last stage of the plant’s startup. The
ramp up of cement production continued and we expect to be fully self-sufficient in clinker during 2016.
The new plant improves the Company’s competitive position in the northern region of Peru. With production
from three plants, the Company is able to serve its market more efficiently. This state-of-the-art plant is the most
modern in Latin America. It also reduces transportation costs by enabling the dispatching of cement from plants
within closer proximity to the point of sale. During 2016, as the clinker production finished its ramp up period, the
Company will achieve significant efficiencies at the consolidated level due to the elimination of imported clinker
and the use of more advanced production technology.
As of March 31, 2016, the Company has invested approximately US$ 363.0 million in the project. It is important to
highlight that at this point the project is under budget, with a total estimated investment below the original
budget of US$ 386 million.
10
First Quarter 2016
Earnings Release
11
First Quarter 2016
Earnings Release
Financial Results:
Income Statement:
The following table shows a summary of the Consolidated Financial Results:
Consolidated Financial Results
(in millions of Soles S/)
1Q16
Income Statement
1Q15
% Var.
Sales of goods
309.6
290.6
6.5%
Gross Profit
114.3
125.1
-8.6%
Total operating expenses, net
-52.9
-52.9
0.0%
61.4
72.2
-15.0%
-21.5
0.1
N/R
Operating Profit
Total other expenses, net
Profit before income tax
39.9
72.3
-44.8%
Income tax expense
-12.2
-20.0
-39.0%
Profit for the period
27.7
52.3
-47.0%
0.7
1.0
-30.0%
28.5
53.2
-46.4%
Non-controlling interests
Equity holders of the parent
Although revenues increased 6.5%, profit for the period decreased 47.0% during 1Q16 compared to 1Q15, mainly
due to increased used of imported clinker in the Piura plant during the startup and ramp up process, and in the
Pacasmayo plant due to the maintenance of our main kiln. Furthermore, the increase in the exchange rate had an
impact in results because some raw materials such as imported clinker and blast furnace slag were consumed at a
higher cost. In addition, the new Piura plant capital expenditures were capitalized, resulting therefore in an
increase of depreciation and financial expenses related to the US$ 300 million debt. It is also important to
mention that, the appreciation of the sol during 1Q16 caused a negative exchange rate effect in our dollar cash
position which also affected our profit for the period.
Sales of Goods:
The following table shows the Sales of Goods and their respective margins by business segment:
Sales: cement, concrete and blocks
(in millions of Soles S/)
Cement, concrete and blocks
1Q16
1Q15
% Var.
Sales of goods
Cost of Sales
278.5
251.0
11.0%
-167.9
-131.4
27.8%
Gross Profit
110.6
119.6
-7.5%
Gross Margin
39.7%
47.6%
-7.9 pp.
Sales of cement, concrete and blocks increased 11.0% during 1Q16 compared to 1Q15, mainly as demand from
the public sector increased sharply. Gross margin decreased 7.9 percentage points during 1Q16 compared to
1Q15, mainly due to higher use of imported clinker.
12
First Quarter 2016
Earnings Release
Sales of cement represented 85.1% of cement, concrete and block sales during 1Q16.
Cement
1Q15
1Q16
Sales of goods
% Var.
236.9
218.3
8.5%
Cost of Sales
-136.8
-106.6
28.3%
Gross Profit
100.0
111.7
-10.5%
Gross Margin
42.2%
51.2%
-9.0 pp.
Sales of cement increased 8.5% in 1Q16 compared to 1Q15, reflecting the improvement in cement demand in the
northern market. Gross margin decreased 9.0 percentage points in 1Q16 compared to 1Q15 due to higher
production costs because of higher use of imported clinker, the effect of exchange rate in raw materials and the
depreciation of the Piura plant.
Sales of concrete represented 12.1% of cement, concrete and block sales during 1Q16.
Sales of goods
Cost of Sales
Gross Profit
Gross Margin
1Q16
Concrete
1Q15
% Var.
33.6
26.2
28.2%
-25.2
-20.3
24.1%
8.4
5.9
42.4%
25.0%
22.5%
2.5 pp.
Sales of concrete increased 28.2% during 1Q16 compared to 1Q15, reflecting the increased demand from
infrastructure projects. Gross margin increased slightly during 1Q16 compared to 1Q15.
Sales of blocks represented 2.9% of cement, concrete and block sales during 1Q16.
Blocks, bricks and pavers
1Q16
1Q15
Sales of goods
Cost of Sales
Gross Profit
Gross Margin
% Var.
8.0
6.5
23.1%
-5.9
-4.5
31.1%
2.0
2.0
0.0%
25.0%
30.8%
-5.8 pp.
During 1Q16, blocks, bricks and pavers sales increased 23.1% compared to 1Q15 mainly due to greater sales for
infrastructure projects. Gross margin decreased 5.8 percentage points, mainly due to an increase in production
costs.
13
First Quarter 2016
Earnings Release
Sales: Quicklime
(in millions of Soles S/)
Quicklime
1Q15
% Var.
14.6
19.0
-23.2%
-11.2
-14.3
-21.7%
1Q16
Sales of goods
Cost of Sales
Gross Profit
Gross Margin
3.5
4.7
-25.5%
24.0%
24.7%
-0.7 pp.
Quicklime sales decreased 23.2% in 1Q16 compared to 1Q15, mainly due to a decrease in demand and lower
prices. However, gross margin remained stable in 1Q16 compared to 1Q15 mainly due to improvements in the
production cost.
Sales: Construction Supplies
(in millions of Soles S/)
2
Construction Supplies
1Q16
1Q15
Sales of goods
Cost of Sales
Gross Profit
Gross Margin
% Var.
15.4
20.4
-24.5%
-15.4
-19.6
-21.4%
-0.1
0.8
-112.5%
-0.6%
3.9%
-4.5 pp.
During 1Q16, sales of construction supplies decreased 24.5% compared to 1Q15, mainly due to lower demand
and increased competition which resulted in lower prices. Gross margin decreased 4.5 percentage points, mainly
due to lower prices.
2
Construction supplies include the following products: steel rebars, wires, nails, corrugated iron, electric conductors, plastic tubes and
accessories, among others.
14
First Quarter 2016
Earnings Release
Operating Expenses:
Administrative Expenses
(in millions of Soles S/)
Administrative expenses
1Q16
1Q15
% Var.
Personnel expenses
26.2
27.4
-4.4%
Third-party services
14.3
13.3
7.5%
Board of directors
1.5
1.8
N/R
Depreciation and amortization
3.0
3.0
0.0%
Other
3.4
3.0
13.3%
Total
48.4
48.5
-0.2%
During 1Q16 administrative expenses remained stable compared to 1Q15.
Selling Expenses
(in millions of Soles S/)
Selling and distribution expenses
1Q16
1Q15
% Var.
Personnel expenses
4.1
3.7
10.8%
Advertising and promotion
3.4
2.2
54.5%
Other
1.6
1.0
60.0%
Total
9.1
6.9
31.9%
During 1Q16 selling expenses increased 31.9% compared to 1Q15, in line with an increase in sales and due to an
increase in the advertising and promotion expenses budget.
15
First Quarter 2016
Earnings Release
EBITDA Reconciliation:
Consolidated EBITDA
(in millions of Soles S/)
Consolidated EBITDA
1Q16
1Q15
Net Income
Var %.
27.7
52.3
-47.0%
12.2
20.1
-39.3%
- Finance income
-0.3
-0.5
-40.0%
+ Finance costs
16.8
5.1
N/R
+/- Net loss from exchange rate
4.9
-4.7
N/R
+ Depreciation and amortization
24.2
17.0
42.4%
85.6
89.2
-4.0%
1.3
2.8
-53.6%
86.9
92.0
-5.5%
+ Income tax expense
Consolidated EBITDA
EBITDA from FdP and Salsud *
Cement EBITDA
* Corresponds to EBITDA excluding the Fosfatos del Pacifico and Salmueras Sudamericanas projects which are not linked to
the cement business and are currently in pre-operating stages, therefore they are not generating revenues.
During 1Q16, consolidated EBITDA decreased 4.0% to S/ 85.6 million compared to S/ 89.2 million in 1Q15, mainly
as a result of lower gross profit, due to higher use of imported clinker because of maintenance in Pacasmayo and
the startup of the Piura plant
Cash and Debt Position:
Cash:
Consolidated Cash
(in millions of Soles S/)
As of March 31, 2016, the Company’s cash position was S/ 111.0 million (US$ 33.4 million). This balance includes
certificates of deposit for S/ 89.9 million (US$ 27.1 million), distributed as follows:
Certificates of deposits in Soles
Bank
Amount (S/)
Interest Rate
Initial Date
Maturity Date
Banco de Crédito del Perú
S/ 7.0
4.90%
March 31,2016
April 14, 2016
Banco de Crédito del Perú
S/ 1.5
4.75%
March 08,2016
June 6, 2016
S/ 8.5
Certificates of deposits in US Dollars
Bank
Interbank
Amount (USD)
Interest Rate
Initial Date
Maturity Date
USD 15.0
0.47%
March 09,2016
June 7, 2016
Banco de Crédito del Perú
USD 2.0
0.30%
March 31,2016
April 14, 2016
Banco de Crédito del Perú
USD 5.5
0.35%
March 08,2016
June 6, 2016
Banco de Crédito del Perú
USD 2.0
0.25%
March 31,2016
April 07, 2016
USD 24.5
16
First Quarter 2016
Earnings Release
The remaining balance of S/ 21.1 million (US$ 6.3 million) is held mainly in the Company’s bank accounts, of
which US$ 3.2 million are denominated in US dollars and the remainder in Soles.
Debt Position:
Consolidated Debt
(in millions of Soles S/)
Below are the contractual obligations with payment deadlines related to the Company’s debt, including interest.
Less than 1 year
Payments due by period
More than 5
1-3 Years
3-5 Years
Years
913.3
Total
Debt adjusted by hedge
-
Future interest payments
44.9
89.8
89.8
89.8
314.3
Total
44.9
89.8
89.8
1,003.1
1,227.6
913.3
As of March 31, 2016, the Company’s total outstanding debt reached S/ 997.6 million (US$ 300.0 million), which
correspond to the international bonds issued in February 2013. These bonds have a coupon rate of 4.50% with a
10-year bullet maturity.
As of March 31, 2016, the Company has entered into cross currency swap hedging agreements for US$300 million
to manage foreign exchange risks related to US dollar-denominated debt. The adjusted debt by hedge is S/913.3
million (US$ 274.6 million).
Net Adjusted Debt/EBITDA ratio was 2.0x
Capex
Capex
(in millions of Soles S/)
During 1Q16, the Company invested S/ 43.7 million (US$ 13.1 million), allocated to the following projects:
Projects
1Q 16
New Piura Plant
30.9
Phosphate Project
7.8
Pacasmayo Plant Projects
3.2
Concrete and aggregates equipment
1.2
Construction of diatomite brick plant
0.4
Rioja Plant Projects
0.2
Total
43.7
17
First Quarter 2016
Earnings Release
Projects
Fosfatos del Pacífico S.A.
In December 2011, the Company sold a 30% stake of the subsidiary Fosfatos del Pacifico S.A. for US$ 46.1 million
to an affiliate of Mitsubishi Corporation, a globally-integrated company listed on the Tokyo Stock Exchange, which
develops and operates business in multiple sectors.
In accordance with the terms of sale, Mitsubishi Corporation signed a long-term contract of purchase and sale
(Off Take Agreement), in which it commits to acquire 2 million MT of phosphate per year with the option to buy
an additional 0.5 million MT per year. The agreement has a term of 20 years.
Fosfatos del Pacifico hired companies to begin a basic engineering study for the project’s various sections. Those
selected were: Golder Associates to study the mine, a FL Smidth Minerals-Jacobs-Golder Associates consortium to
study the plant, Berenguer Ingenieros to study the port, and Pepsa Tecsult and Aecom to study the electrical
transmission and water. During the second half of 2014, value engineering was developed to identify
opportunities to improve design, construction, and project operations. Fosfatos del Pacifico hired the main
engineering companies (Hatch, Ausenco and WorleyParsons) according to experience and knowledge in various
areas. Within the main scope of this value engineering are the change in the methodology of mining, from a
conventional mining to a continuous mining system, thereby making the mining process more efficient; the
reduction of the footprint of the processing plant without reducing capacity; and size reduction of the port
according to the capacity requirements of the project.
In March 2014, the environmental impact study for the phosphate project was approved. This is an important
milestone in the development of the project and reflects the Company’s commitment to its execution.
In April 2015, the onsite Laboratory was certified as Overseas Member of the Association of Fertilizer and
Phosphate Chemists and ISO 9001.
During 2015 the project incorporated the value engineering findings, from a conceptual level to a basic
engineering level, which allowed for a more accurate analysis of the project. In order to integrate the engineering
efforts of the different components of the project, through a bidding process, Pacasmayo hired WorleyParsons to
act as “Project Management Consultant”, a position it will hold throughout the engineering process, as well as
during the procurement, construction, and start of operations.
The feasibility study was concluded at the end of 2015 and the Company is currently evaluating next steps.
Salmueras Sudamericanas S.A.
In 2011, the Company signed an agreement with Quimica del Pacifico (Quimpac), a leading Peruvian chemical
company, to establish Salmueras Sudamericanas S.A., in which the Company owns 74.9% of the outstanding
shares, with Quimpac holding the remaining 25.1%.
The basic engineering study was conducted by the German company, K-Utec AG Salt Technologies, which has
over 50 years of experience in the salt business, and is currently being evaluated by both partners in order to
determine how to move forward according to their investment priorities. The environmental impact study was
approved in December 2014.
18
First Quarter 2016
Earnings Release
Recent Events
S&P revised outlook to Positive from Stable – On February 25, 2016, Standard & Poor's Ratings Services revised
its outlook on Cementos Pacasmayo S.A.A. (CPAC) to positive from stable. The outlook revision reflects their
expectation that CPAC will continue to post solid operating and financial results in the next 12-18 months.
On April 11, 2016, the Environmental Impact Assesment (EIA) for the Alto Chicama Coal Project was approved by
the Ministry of Energy and Mines.
19
First Quarter 2016
Earnings Release
About Cementos Pacasmayo S.A.A.
Cementos Pacasmayo S.A.A. is a cement company, located in the Northern region of Peru. In February 2012, the
Company’s shares were listed on The New York Stock Exchange - Euronext under the ticker symbol "CPAC". With
more than 57 years of operating history, the Company produces, distributes and sells cement and cement-related
materials, such as concrete blocks and ready-mix concrete. Cementos Pacasmayo’s products are primarily used in
construction, which has been one of the fastest-growing segments of the Peruvian economy in recent years. The
Company also produces and sells quicklime for use in mining operations.
For more information, please visit: http://www.cementospacasmayo.com.pe/investors
Note: The Company presented some figures converted from Soles to U.S. Dollars for comparison purposes. The exchange rate
used to convert Soles to U.S. dollars was S/ 3.326 per US$ 1.00, which was the exchange rate, reported as of March 31, 2016 by
the Superintendencia de Banca, Seguros y AFP’s (SBS). The information presented in U.S. dollars is for the convenience of the
reader only. Certain figures included in this report have been subject to rounding adjustments. Accordingly, figures shown as
totals in certain tables may not be arithmetic aggregations of the figures presented in previous quarters.
This press release may contain forward-looking statements. These statements are statements that are not historical facts,
and are based on management’s current view and estimates of future economic circumstances, industry conditions, Company
performance and financial results. Also, certain reclassifications have been made to make figures comparable for the periods.
The words “anticipates”, “believes”, “estimates”, “expects”, “plans” and similar expressions, as they relate to the Company,
are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the
implementation of principal operating and financing strategies and capital expenditure plans, the direction of future
operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of
forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks
and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are
based on many assumptions and factors, including general economic and market conditions, industry conditions, and
operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current
expectations.
20
First Quarter 2016
Earnings Release
Consolidated statements of financial position
As of March 31, 2016 (unaudited) and December 31, 2015 (audited)
Assets
Current Assets
Cash and term deposits
Trade and other receivables
Income tax prepayments
Inventories
Prepayments
Non-current assets
Other receivables
Prepayments
Available-for-sale financial investments
Other financial instruments
Property, plant and equipment
Exploration and evaluation assets
Deferred income tax assets
Other assets
Total assets
Liabilities and equity
Current liabilities
Trade and other payables
Income tax payable
Provisions
Non-current liabilities
Interest-bearing loans and borrowings
Other non-current provisions
Deferred income tax liabilities
Total liabilities
As of Mar-16
S/ (000)
110,952
86,230
57,876
292,631
20,233
567,922
As of Dec-15
S/ (000)
158,007
110,897
44,910
307,478
7,188
628,480
As of Mar-16
S/ (000)
66,788
1,200
577
124,797
2,507,563
87,900
22,281
726
2,811,832
As of Dec-15
S/ (000)
64,145
1,432
436
124,770
2,490,815
81,862
21,077
777
2,785,314
3,379,754
3,413,794
As of Mar-16
S/ (000)
129,043
2,163
33,541
164,747
As of Dec-15
S/ (000)
170,761
3,906
28,880
203,547
As of Mar-16
S/ (000)
987,317
9,264
125,084
1,121,665
As of Dec-15
S/ (000)
1,012,406
32,638
119,069
1,164,113
1,286,412
1,367,660
As of Mar-16
S/ (000)
531,461
50,503
-108,248
545,945
179,304
30,643
753,378
As of Dec-15
S/ (000)
531,461
50,503
-108,248
553,466
176,458
11,649
727,765
1,982,986
110,356
1,943,054
103,080
2,093,342
2,046,134
3,379,754
3,413,794
0
Equity
Capital stock
Investment shares
Treasury shares
Additional paid-in capital
Legal reserve
Other reserves
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Total liabilities and equity
21
First Quarter 2016
Earnings Release
Consolidated statements of profit or loss
For the three month period ended March 31, 2016 and 2015 (both unaudited)
1Q16
S/. (000)
309,600
-195,315
114,285
1Q15
S/. (000)
290,604
-165,518
125,086
-48,409
-9,076
4,583
-52,902
-48,474
-6,899
2,514
-52,859
61,383
72,227
266
-16,839
-4,889
537
-5,138
4,685
Total other expenses, net
-21,462
84
Profit before income tax
39,921
72,311
-12,180
27,741
-20,054
52,257
28,459
-718
27,741
53,232
-975
52,257
0.05
0.09
Sales of goods
Cost of sales
Gross profit
Operating expenses
Administrative expenses
Selling and distribution expenses
Other operating expenses, net
Total operating expenses , net
Operating profit
Other income (expenses)
Finance income
Finance costs
Net gain (loss) frm exchange rate, net
Income tax expense
Profit for the period
Attributable to:
Equity holders of the parent
Non-controlling interests
Net income
Earnings per share
Basic and diluted for period attributable to equity holders of common
shares and investment shares of the parent (S/. per share)
22
First Quarter 2016
Earnings Release
Consolidated statements of changes in equity
For the three-months period ended March 31, 2016 and 2015 (both unaudited)
Attributable to equity holders of the parent
Investment
shares
S/.(000)
Capital stock
S/.(000)
Treasury
shares
S/.(000)
Additional
paid-in capital
S/.(000)
Unrealized
gain (loss) on
available-forsale
investments
S/.(000)
Legal reserve
S/.(000)
Unrealized
gain on cash
flow hedge
S/.(000)
Retained
earnings
S/.(000)
Noncontrolling
interests
S/.(000)
Total
S/.(000)
Total equity
S/.(000)
Balance as of January 1, 2015
Profit for the year
Other comprehensive income
Total comprehensive income
531,461
-
50,503
-
-
553,791
-
154,905
-
218
-108
-108
4,926
-4,490
-4,490
696,736
53,232
53,232
1,992,540
53,232
-4,598
48,634
78,145
-975
-975
2,070,685
52,257
-4,598
47,659
Appropriation of legal reserve
-
-
-
-
5,322
-
-
-5,322
-
-
-
Balance as of March 31, 2015
531,461
50,503
-
553,791
160,227
110
436
744,646
2,041,174
77,170
2,118,344
Balance as of January 1, 2016
Profit for the year
Other comprehensive loss
Total comprehensive income
531,461
-
50,503
-
-108,248
-
553,466
-
176,458
-
-11
104
104
11,660
18,890
18,890
727,765
28,459
28,459
1,943,054
28,459
18,994
47,453
103,080
-718
-718
2,046,134
27,741
18,994
46,735
Appropriation of legal reserve
Contribution of non-controlling interests
-
-
-
-
2,846
-
-
-
-2,846
-
-
473
473
Other adjustments of non-controlling interests
-
-
-
-7,521
-
-
-
-
-7,521
7,521
-
531,461
50,503
-108,248
545,945
179,304
93
30,550
753,378
1,982,986
110,356
2,093,342
Balance as of March 31, 2016