Release Date: August 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated EBITDA increased by 6.3% year-over-year, reaching PEN389 million.
- Top line posted a 7% increase with revenues reaching PEN1.7 billion.
- Strong performance in the North American market with significant volume increases in Drake and Tehachapi.
- Ready-mix business in Peru recorded a 21.4% growth in volumes due to ongoing infrastructure projects.
- Higher average prices and fuel cost efficiencies resulted in an improved gross margin of 25.7%.
Negative Points
- Peru cement dispatches decreased by 2.8% year-over-year.
- Clinker export through the Conchan terminal was 22.7% lower than the second quarter of 2023.
- UNACEM Ecuador's cement volumes declined by 2.8% year-over-year.
- Consolidated net debt increased to PEN5.3 billion, with a net debt-to-EBITDA ratio of 3.47x, above the 3x target.
- Higher financial expenses and income taxes impacted net profit, which was PEN47 million for the quarter.
Q & A Highlights
Q: Could you give us insights about the entry of a new international competitor to the local market?
A: At this moment, we will not respond to questions related to forward cost potential speculations on a new player, which, as Pedro has already mentioned, we welcome to Peru. (Julia Sobrevilla, Corporate Affairs and Publishing Director)
Q: Could you give us more detail on the higher nonrecurring expenses? Do you expect more of these nonrecurring expenses for the following quarter?
A: We received a notification from the Tribunal Fiscal from Peru. Sunat started to ask us for PEN52 million, which is a contingency from the income tax of 2010. The composition includes income tax payment of PEN18.6 million, interest of PEN28.2 million, and a fine of PEN5.4 million. We have registered this but are continuing to fight this contingency. (Alvaro Antonio Morales Puppo, Chief Financial Officer)
Q: What are the main investments related to CapEx disbursement?
A: The main investments are related to Kiln number III, the dust system, and the roofing of the clinker fields in UNACEM Peru; improvement in the grinding facility in Drake cement; and the increase in fixed assets for the ready-mix division in the US; mixer trucks and pumps in UNACEM Peru; and kiln number I debottlenecking to increase production in UNACEM Ecuador. (Alvaro Antonio Morales Puppo, Chief Financial Officer)
Q: Can you provide more details on the performance of the North American market?
A: Our US operation, UNACEM North America, reported 321,000 metric tonnes of cement sold during the second quarter 2024, which is 94.5% higher than the second quarter 2023. Tehachapi contributed with 159,000 tonnes of cement. Ready-mix operations recorded 254,000 cubic meters sold, 5.1% lower than in the second quarter 2023. (Alvaro Antonio Morales Puppo, Chief Financial Officer)
Q: How did the Peruvian market perform in the second quarter?
A: Peru cement dispatches registered 1.4 million tonnes, a decrease of 2.8% versus the second quarter of 2023 and a sequential increase of 1.7%. Ready-mix business in Peru recorded strong volumes with 729,000 cubic meters, a growth of 21.4% due to ongoing infrastructure projects. (Alvaro Antonio Morales Puppo, Chief Financial Officer)
Q: What is the current leverage ratio and future expectations?
A: We closed the quarter with a leverage ratio of 3.47x EBITDA, above our 3x EBITDA goal. However, the full-year impact of our latest acquisitions and stronger performance expected going forward should contribute to lower debt levels in the next couple of years. (Pedro Lerner Rizo Patron, Chief Executive Officer)
Q: What are the expectations for EBITDA growth in 2024?
A: We maintain our guidance of consolidated EBITDA growth in the mid-single digits for this year. We see a pickup in construction in Peru and believe our strategic initiatives on the commercial front will offset the slowdown in certain geographies. (Pedro Lerner Rizo Patron, Chief Executive Officer)
Q: How did the Chilean market perform in the second quarter?
A: UNACEM Chile cement dispatches recorded 113,000 tonnes sold during the quarter, which is 11.7% lower year over year. Ready-mix dispatches were flat with 170,000 cubic meters dispatched. (Alvaro Antonio Morales Puppo, Chief Financial Officer)
Q: What were the main drivers for the 7% year-over-year increase in consolidated revenues?
A: The increase was driven mostly by the incorporation of our latest acquisition, Tehachapi, as well as stronger sales in our ready-mix operations in Peru, coupled with higher average prices in our cement business in Peru. (Alvaro Antonio Morales Puppo, Chief Financial Officer)
Q: What is the status of the clinker export through the Conchan terminal?
A: Clinker export through the Conchan terminal reached 107,000 tonnes, 22.7% lower than the second quarter of 2023, in line with our commitments to clients this year. (Alvaro Antonio Morales Puppo, Chief Financial Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
