Cementos Pacasmayo Earnings Call: Record EBITDA, Big Deal

Cementos Pacasmayo S.a.a. ((CPAC)) has held its Q4 earnings call. Read on for the main highlights of the call.

Cementos Pacasmayo’s latest earnings call painted a broadly upbeat picture, with strategic and operational strength offsetting short‑term noise. Management highlighted record EBITDA, robust cement demand and ESG leadership, even as hefty one‑off transaction costs, segment margin pressure and higher leverage weighed on reported net income.

Holcim deal validates strategy but adds execution risk

Holcim agreed to acquire Inversiones Aspi, which controls 50.01% of Cementos Pacasmayo, at a PEN 5.1 billion valuation, roughly 9x LTM EBITDA to July 2025. Management framed the deal as a strong endorsement of Pacasmayo’s strategy, while cautioning that regulatory approvals and change‑of‑control clauses still pose timing and execution risks.

Record EBITDA underscores resilient core operations

Pacasmayo delivered an all‑time high full‑year 2025 EBITDA of PEN 594.2 million, up 6.4% year‑on‑year when stripping out transaction costs. The company also emphasized that underlying profitability would have been even stronger absent the one‑off charges tied to the Holcim transaction.

Quarterly earnings strength masked by one‑offs

Quarterly EBITDA excluding transaction expenses reached PEN 158.7 million, an 11.4% increase year‑on‑year. Gross profit climbed at the same 11.4% pace, helped by lower raw material costs, higher use of own clinker and operational efficiencies across plants.

Solid revenue growth through the cycle

Revenues for the reported quarter rose 6.2% year‑on‑year to PEN 559.5 million, supported by stronger pricing and mix. For the full year, revenues increased about 7% versus 2024, showing Pacasmayo’s ability to grow top line despite project delays and softer volumes late in the year.

Cement sales outpace the broader construction market

Cement volumes were a key bright spot, with quarterly cement sales jumping 30.6% versus the prior year period. Full‑year cement sales grew 8.7%, driven by robust demand from construction, agro, industrial and fishing activities in Northern Peru, underscoring Pacasmayo’s regional strength.

Margin gains from cost discipline and efficiency

Gross margin improved by 0.4 percentage points in the quarter and 1.9 points for the full year compared with 2024. Management credited lower raw material costs, reduced reliance on imported clinker and targeted operational and maintenance initiatives that streamlined production.

Underlying net income growth despite reported loss

Excluding one‑off transaction expenses, consolidated net income would have reached PEN 59.8 million for the quarter, up 19.6% year‑on‑year. On a full‑year basis, adjusted net income would have been PEN 231.8 million, a 16.5% increase, highlighting the gap between headline earnings and underlying performance.

ESG leadership becomes a strategic differentiator

The company secured 3‑star recognition from Peru’s Environment Ministry for consecutive greenhouse‑gas reductions between 2022 and 2024 at its Rioja, Pacasmayo and Piura plants. It also held the industry‑leader position in the Merco ESG ranking for a 10th straight year and ranked ninth among Peru’s most responsible companies overall.

Quarterly volume softness from project timing

Despite the strong full‑year numbers, overall sales volumes in the quarter dropped 8.2% year‑on‑year. Management attributed the weakness to timing issues, notably the Motupe riverbank protection project being put on standby, rather than a broad deterioration in underlying demand.

Concrete and mortar margins hit by specific projects

Concrete, pavement and mortar sales declined 25.1% year‑on‑year in the quarter, though they still rose 6.3% for the full year. Segment gross margins deteriorated sharply, falling about 7.8 percentage points in the quarter and roughly 3.2–3.3 points for the year, as the Motupe halt and Piura airport execution weighed on profitability.

Transaction costs distort short‑term profitability

The company booked approximately PEN 77–80 million of acquisition‑related transaction expenses tied to the Holcim deal. These charges pushed consolidated quarterly net income into negative territory and temporarily depressed reported profitability metrics that equity investors typically track.

Operating cost inflation pressures the P&L

Administrative expenses surged 50% for the full year and 5.7% in the quarter, mainly reflecting higher personnel costs from collective bargaining agreements. Selling expenses fell 8.3% in the quarter but climbed about 40% for the year due to stepped‑up advertising, promotion and related commercial initiatives.

Higher leverage raises balance‑sheet questions

Net debt to EBITDA increased to 2.8x, signaling a more leveraged balance sheet despite efforts to smooth amortization. Management did not flag immediate liquidity concerns, but the higher gearing could limit flexibility if macro or project‑related headwinds intensify.

Project timing risk keeps segment results volatile

The pause of the Motupe riverbank protection works and ongoing execution of the Piura airport project created sizable quarter‑to‑quarter swings in volumes and margins. Management acknowledged that similar timing effects could continue to affect near‑term performance in the concrete and infrastructure‑linked businesses.

Construction products margins remain under pressure

Precast materials sales fell 16% in the quarter, though they rose 3% for the full year, illustrating the same pattern of quarterly volatility. Margins across several construction product lines were squeezed by an unfavorable project mix and tough comparisons with last year’s unusually strong profitability.

Guidance signals steady margins and stronger volumes

For 2026, management expects volumes to exceed 2025 levels while prices remain competitive and EBITDA margins stay at or slightly above current levels, helped by energy‑saving projects in the second half. They also anticipate election‑related public spending to accelerate after mid‑year, supporting infrastructure demand, but refrained from providing numeric revenue or EBITDA targets.

Cementos Pacasmayo’s call blended strategic optimism with a candid view of near‑term headwinds, offering a nuanced picture for investors. Record EBITDA, strong cement demand and ESG leadership support the Holcim valuation, while project volatility, higher costs and leverage remain key watchpoints heading into 2026.