6-K 1 a50569939.htm CEMENTOS PACASMAYO S.A.A. 6-K a50569939.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of February 2013

 Commission File Number 001-35401

CEMENTOS PACASMAYO S.A.A.
(Exact name of registrant as specified in its charter)
 
PACASMAYO CEMENT CORPORATION
(Translation of registrant’s name into English)
 
Republic of Peru
(Jurisdiction of incorporation or organization)
 
Calle La Colonia 150, Urbanización El Vivero
Surco, Lima
Peru
(Address of principal executive offices)
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
Form 20-F ____X___ Form 40-F _______
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes _______ No ___X____
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.

 
 
 
 
Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


CEMENTOS PACASMAYO S.A.A.

 
 

By: /s/ CARLOS JOSE MOLINELLI MATEO

Name: Carlos Jose Molinelli Mateo

Title: Stock Market Representative

 
 

Date: February 19, 2013

 
 
 
 
Fourth Quarter 2012 Earnings Release  logo
 
 
 
Cementos Pacasmayo S.A.A. Announces Consolidated
Results for Fourth Quarter 2012


Lima, Peru, February 19, 2013 – Cementos Pacasmayo S.A.A. and subsidiaries (NYSE: CPAC; BVL: CPACASC1) (“the Company” or “Cementos Pacasmayo”) a leading Peruvian cement company, announced today its consolidated results for the fourth quarter (“4Q12”) and twelve months (“2012”) ended December 31, 2012. These results have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and are stated in nominal Peruvian nuevos soles (S/.).
 
Financial Highlights:  
 
It is  important to note the following highlights:

●  
Cement sales volume increased 16.6% in 2012 compared to 2011, and 14.2% in 4Q12 compared to 4Q11.

●  
 Net income increased 134.9% in 2012 compared to 2011 (S/. 159.0 million vs. S/. 67.7 million, see page 7), and 41.0% in 4Q12 compared to 4Q11 (S/. 39.9 million vs. S/. 28.3 million).

●  
Cement EBITDA increased 7.9% in 2012 compared to 2011 (S/. 292.1 million vs. S/. 270.8 million), and 11.7% in 4Q12 compared to 4Q11 (S/. 78.3 million vs. S/. 70.1 million).

●  
Private offering of US$ 300 million in Senior Notes in the international markets – On February 1, 2013, the Company successfully placed US$300 million in Senior Notes, with a coupon rate of 4.50%, and a yield to maturity of 4.625%, due on 2023. Demand for the notes exceeded US$ 2.5 billion.

 
For more information please visit www.cementospacasmayo.com.pe/accionistas or contact:
   
In Lima:
In New York:
   
Manuel Ferreyros, CFO
Claudia Bustamante, Investor Relations
Cementos Pacasmayo
Tel: (511) 317‐6000 ext. 2165
Email: cbustamante@cpsaa.com.pe
 Rafael Borja / Melanie Carpenter
i‐advize Corporate Communications, Inc.
Tel: (212) 406‐3693
E‐mail: cementospacasmayo@i‐advize.com
 
 
 
 
 
 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 
 
   4Q12 versus 4Q11:

●  
Sales of goods increased S/. 39.7 million (14.3%)

●  
Gross profit increased S/. 5.7 million (4.6%)

●  
Operating profit increased S/. 11.3 million (22.1%)

●  
Consolidated adjusted EBITDA increased S/. 4.3 million (6.2%)
 
 
 
Financial and Operating Results
 
4Q12
4Q11
% Var.
2012
2011
% Var.
In thousands of metric tons
            
Cement, concrete and blocks volume
617.5
540.8
14.2%
2,258.5
1,936.9
16.6%
Quicklime volume
21.0
22.1
-5.0%
100.9
93.2
8.3%
             
In millions of S/.
            
Sales of goods
317.0
277.3
14.3%
1,169.8
995.0
17.6%
Gross profit
128.8
123.1
4.6%
456.8
425.5
7.4%
Operating profit
62.4
51.1
22.1%
230.5
118.9
93.9%
Net income of controller
39.9
28.3
41.0%
159.0
67.7
134.9%
Consolidated adjusted EBITDA
73.3
69.0
6.2%
278.5
267.2
4.2%
Cement EBITDA
78.3
70.1
11.7%
292.1
270.8
7.9%
Net cash flows provided by operating activities
12.7
35.4
-64.1%
99.7
132.3
-24.6%
Net cash flows used in investing activities
-138.7
-60.7
128.5%
-667.4
-239.2
179.0%
Gross Margin
40.6%
44.4%
- 3.8 pp.
39.0%
42.8%
 -3.8 pp.
Operating Margin
19.7%
18.4%
1.3 pp.
19.7%
11.9%
7.8 pp.
Net Income of Controller Margin
12.6%
10.2%
2.4 pp.
13.6%
6.8%
6.8 pp.
Consolidated adjusted EBITDA Margin
23.1%
24.9%
-1.8 pp.
23.8%
26.9%
 -3.1 pp.
Cement EBITDA Margin
24.7%
25.3%
-0.6 pp.
25.0%
27.2%
 -2.2 pp.
 
 
2
 
 
 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 
 
Economic Overview for 4Q12:

APOYO Consultoría1 estimates that Peru’s economy grew 6.6% in 4Q12, similar to the 6.5% registered in 3Q12. Likewise, APOYO estimates that construction GDP grew 14.5% in 4Q12. Furthermore, inflation in 4Q12 was approximately 2.6%, below the 3.7% recorded in 3Q12.

According to APOYO Consultoria’s Economic Situation and Projections Report, the Peruvian economy continues to grow in a dynamic manner, mainly driven by domestic demand. During 4Q12, public spending in salaries and purchase of goods and services were the most important drivers, growing by approximately 15%. The beneficiaries from these salary increases are mainly families from the B and C socio-economic levels.

High income consumers reported  historic levels of consumer confidence. 70% of families from the A and B socio-economic levels expect an improvement in their economic situation during the next 12 months, the highest rate obtained since mid-2006.  This optimism level could contribute to consumption growth exceeding 5% in 2013, primarily benefiting  those sectors tied to durable goods, such as housing.

Accumulated growth of domestic cement comsuption between January and October 2012 was 16.3%, and estimates indicate this performance remained the same in November and December 2012. Therefore, during 2012, domestic cement comsumption reached approximately 17%, a higher rate than estimated in August 2012 (13%). It is important to note that, during 2012, mortgage credit increased 26%, which boosted demand for housing.
 

Graphic


 
   
1  Apoyo Consultoria (APOYO) is a specialized advisory firm that provides information regarding Peruvian  economics, finance, business and public affairs.
 
 
3
 

 
 
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          Fourth Quarter 2012 Earnings Release
 
 

 
Peruvian Cement Industry Overview

Cement production in Peru is naturally segmented between three geographic regions: the northern region, the central region (including the Lima Metropolitan Area), and the southern region. Cementos Pacasmayo is the only cement manufacturer in the northern region of Peru. UNACEM mainly supplys the central region, while Cementos Yura and Cementos Sur operate in the southern region.

Cementos Pacasmayo supplies all cement needs in the northern region of Peru, which, according to the Instituto Nacional de Estadística e Informática (INEI), represented in the last 12 months as of November 20122 approximately 22.0% of the country’s population and 15.0%3 of national Gross Domestic Product (“GDP”).

In 4Q12, the Company sold 617.5 thousand metric tons of cement, which represented approximately 21.6% of Peru’s total cement distribution throughout the country and nearly all cement consumed in the northern region.

In Peru, the majority of cement is sold to a highly fragmented base of consumers that tend to gradually buy bags of cement to build or to improve their homes, a segment the Company refers to as “self-construction”.
 

 
  Peruvian Cement Market
  Shipments by plant and market share
 graphic  graphic
 
   
2  Official figures reported by INEI as of November 2012.
3  Source: APOYO Consultoria as of 2011
 
 
4
 
 

 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 
Operating Results:

Production:

Cement Production Volume
(thousands of metric tons)
 
 
Production
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Pacasmayo Plant
570.6
487.3
17.1%
      2,052.7
          1,750.5
17.3%
Rioja Plant
50.4
54.0
-6.7%
         200.3
          195.4
2.5%
Total
621.0
541.3
14.7%
      2,253.0
       1,945.9
15.8%
 
In 4Q12, total cement production volume rose 14.7% compared to 4Q11. Strong demand for cement in the northern region remained very dynamic and continued to generate higher production volumes. Likewise, during 2012, cement production volumes increased 15.8% compared to 2011.

The strength in public and private investment, favorable financing conditions and the creation of high quality jobs resulted in higher cement sales volume.

Clinker Production Volume
(thousands of metric tons)

 
Production
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Pacasmayo Plant
336.0
334.1
0.6%
1,211.6
1,160.3
4.4%
Rioja Plant
39.5
41.6
-5.0%
159.1
154.6
2.9%
Total
375.5
375.7
-0.1%
1,370.7
1,314.9
4.2%

 
In 4Q12, clinker production volume was similar to 4Q11. Additionally, clinker production volume rose 4.2% during 2012 compared to 2011.

Quicklime Production Volume
(thousands of metric tons)

 
Production
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Pacasmayo Plant
20.4
24.2
-15.7%
101.4
89.6
13.2%


In 4Q12, quicklime production volume decreased 15.7% compared to 4Q11, explained by lower demand from the Company’s customers. However, quicklime production volume rose 13.2% during 2012 compared to 2011. It is important to mention that the client base has become diversified.

 
5
 
 
 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 
 
Installed Capacity:

Installed Cement and Clinker Capacity

The annual installed cement capacity at the Pacasmayo plant remained stable at 2.9 million metric tons. Similarly, annual installed cement capacity at the Rioja plant remained stable at 0.2 million metric tons. The Company is currently doubling cement production capacity at the Rioja plant via the installation of a new production line that will add 0.24 million metric tons of annual installed cement production capacity. This project has encountered some delays, but it will be operational during 1Q13.

Furthermore, the annual installed clinker capacity at the Pacasmayo plant remained stable at 1.5 million metric tons. Annual installed clinker capacity at the Rioja plant will increase by 0.08 million metric tons in 1Q13.

Utilization Rate:

Pacasmayo Plant4 Utilization Rate
 
 
Utilization Rate
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Cement
78.7%
67.2%
11.5 pp.
70.8%
60.4%
10.4 pp.
Clinker
89.6%
89.1%
0.5 pp.
80.8%
77.4%
3.4 pp.
Quicklime
34.0%
40.3%
- 6.3 pp.
42.2%
37.3%
4.9 pp.
 
The utilization rate of cement production at the Pacasmayo Plant increased 11.5 percentage points in 4Q12 compared to 4Q11, reaching a 78.7%. Likewise, the utilization rate of cement production during 2012 increased 10.4 percentage points compared to 2011, reaching 70.8%. As was the case in previous quarters, these increases were mainly due to greater usage of the Company’s equipment to meet the growing demand in the northern region of Peru.

The clinker utilization rate remained at the same level during 4Q12 compared to 4Q11, reaching a rate of 89.6%. Similarly, clinker utilization rate in 2012 increased 3.4 percentage points compared to 2011, reaching a rate of 80.8%. Is important to highlight that during 2012 some of the Company’s equipment was taken off-line for scheduled maintenance and other unscheduled stops, which affected the annual utilization rate.
 
 
The quicklime utilization rate decreased 6.3 percentage points during 4Q12, compared to 4Q11, due to a decline in demand. However, it rose 4.9 percentage points in 2012 compared to 2011.

Rioja Plant5 Utilization Rate
 
 
Utilization Rate
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Cement
100.8%
108.0%
 -7.2 pp.
100.2%
97.7%
2.5 pp.
Clinker
79.1%
83.1%
-4.0 pp.
79.6%
77.3%
2.3 pp.
 
   
4-5 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

 
6
 
 
 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 
 
The cement utilization rate at the Rioja plant reached 100.8% in 4Q12. For 2012, the cement utilization rate increased 2.5 percentage points compared to 2011, reaching a cement utilization rate of 100.2%.

As mentioned above, the Company is currently doubling the capacity of cement production, with the installation of a new production line that will add 0.24 million metric tons of annual installed cement capacity by 1Q13. This will enable the Company to stop dispatching cement produced at the Pacasmayo Plant to supply the region.
 
Financial Results:

The following table shows a summary of the Consolidated Financial Results:

Consolidated Financial Results (in millions of nuevos soles S/.)

*Net income from  2011 was affected by  S/. 67.1 million as a result of the impairment of zinc mining assets.
 
 
Income Statement
 
4Q12
4Q11
% Var.
2012
2011
  
% Var.
Sales of goods
317.0
277.3
14.3%
1,169.8
995.0
  
17.6%
Gross Profit
128.8
123.1
4.6%
456.8
425.5
  
7.4%
Total operating expenses, net
-66.4
-72.0
-7.8%
-226.3
-306.6
  
-26.2%
Operating Profit
62.4
51.1
22.1%
230.5
118.9
  
93.9%
Total other expenses, net
1.0
-5.4
N/R
-1.2
-15.1
  
-92.1%
Profit before income tax
63.4
45.7
38.7%
229.3
103.8
  
120.9%
Income tax expense
-24.5
-19.6
25.0%
-73.7
-38.3
  
92.4%
Net Income
38.9
26.1
49.0%
155.6
65.5
  
137.6%
Non-controlling interests
-1.0
-2.2
-54.5%
-3.4
-2.2
  
54.5%
Net Income of controller
39.9
28.3
41.0%
159.0
67.7
* 
134.9%
 
Sales of goods:

Sales of goods: Cement, concrete and blocks (in millions of nuevos soles S/.)
 
 
Cement, concrete and blocks
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Sales of goods
273.7
226.7
20.7%
972.2
803.0
21.1%
Cost of Sales
-147.0
-110.7
32.8%
-531.7
-394.2
34.9%
Gross Profit
126.7
115.9
9.3%
440.5
408.8
7.8%
Gross Margin
46.3%
51.2%
 -4.9 pp.
45.3%
50.9%
 -5.6 pp

Sales of cement, concrete and blocks increased 20.7% in 4Q12 compared to 4Q11, mainly driven by strong demand in the northern region of Peru, a trend that continues since the beginning of 2012. Likewise, sales of cement, concrete and blocks grew 21.1% during 2012 compared to 2011.

Growth of Peru’s GDP during 2012 was 6.4%6 and growth for construction GDP in the same period was approximately 15.7%7. The greater demand for cement is mainy driven by the continuation of construction of public works, mining companies, shopping centers, industrial facilities and housing.
 
   
6-7 All macorecomic figures for 4Q12  were obtained from Apoyo Consultoria (APOYO), a specialized advisory firm that provides information regarding Peruvian economics, finance, business and public affairs.
 
 
7
 
 
 
 
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          Fourth Quarter 2012 Earnings Release
 
 

Similarly, the “self-construction” segment continued to drive sales as a result of economic growth registered in the northern region of Peru. Additionally, favorable financing conditions and the creation of quality jobs drove growth in private consumption leading to increased cement sales volume.

Cement, concrete and blocks sales during 4Q12 were comprised as follows:

Graphic
Sales growth of the cement, concrete and blocks segment during 4Q12 was primarily driven by an increase in cement sales, which rose 19.2% compared to the same period in 2011, and sales growth of concrete, which rose 47.1% compared to 4Q11.
 
Graphic
Gross profit of cement, concrete and blocks increased S/. 10.8 million in 4Q12 compared to 4Q11. However, gross margin decreased 4.9 percentage points in 4Q12 compared to 4Q11.
 
 
8
 
 
 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 
 
It is important to remember that based on the Company’s new commercial strategy, approximately 100% of current cement sales were sold under the door-to-door system. As was the case in the previous quarters, this strategy caused an increase in both revenues and freight costs, which did not impact margins in absolute terms.  However, this strategy did reduce the percentage margin of cement, concrete and blocks segment.

Likewise, in 2012, consolidated gross margin for the cement, concrete and block segment decreased 5.6 percentage points compared to 2011, mainly explained by an increase in clinker costs due to equipment maintenance.  Additionally, in order to satisfy the sustained increase in demand during the year, the Company used 207 thousand metric tons of imported clinker, which has higher costs than the clinker produced by the Company.

Sales of goods: Construction Supplies8 (in millions of Nuevos Soles S/.)

 
Construction Supplies
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Sales of goods
31.5
38.3
-17.8%
143.2
143.3
-0.1%
Cost of Sales
-30.2
-37.1
-18.6%
-138.3
-138.9
-0.4%
Gross Profit
1.3
1.2
8.3%
4.9
4.4
11.4%
Gross Margin
4.1%
3.1%
 1.0 pp.
3.4%
3.1%
  0.3 pp.
 
During 4Q12, sales of construction supplies decreased 17.8% compared to 4Q11. However, sales of construction supplies remained at the same levels when comparing 2012 and 2011.

Gross margin in 4Q12 was slightly higher than in previous quarters, reaching 4.1% compared to 3.1% in 4Q11. Accumulated results in 2012, both in terms of sales of goods and gross margin remained the same compared to 2011.
 
Sales of goods: Quicklime (in millions of Nuevos Soles S/.)
 
 
Quicklime
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Sales of goods
11.1
11.5
-3.5%
52.7
45.9
14.8%
Cost of Sales
-9.0
-8.4
7.1%
-39.8
-33.8
17.8%
Gross Profit
2.1
3.1
-32.3%
12.9
12.1
6.6%
Gross Margin
18.9%
27.0%
-8.1 pp.
24.5%
26.4%
-1.9 pp.

Quicklime sales decreased 3.5% in 4Q12 compared to 4Q11. However, quicklime sales grew 14.8% in 2012 compared to 2011.

Furthermore, gross margin decreased 8.1 percentage points in 4Q12 compared to 4Q11 and decreased 1.9 percentage points in 2012 compared to 2011.

   
8 Construction supplies include the following products: steel rebars, wires, nails, corrugated iron, electric conductors, plastic tubes and accessories, among others.
 
9
 
 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 
 
 Operating Expenses:

Administrative expenses (in millions of nuevos soles S/.)
 
 
Administrative expenses
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Personnel expenses
28.4
30.1
-5.6%
91.7
90.3
1.6%
Third-party services
27.5
31.4
-12.4%
82.8
81.3
1.8%
Board of directors compensation
1.2
1.2
-
5.1
5.4
-5.6%
Depreciation and amortization
2.6
2.9
-10.3%
10.7
9.5
12.6%
Other
3.2
1.0
N/R
12.8
9.7
32.0%
Total
62.9
66.6
-5.6%
203.1
196.2
3.5%
 
During 4Q12, administrative expenses decreased 5.6% compared to 4Q11 primarily due to lower personnel expenses  and third-party services.

Administrative expenses slightly increased in 2012 compared to 2011.

Selling and distribution expenses (in millions of nuevos soles S/.)

 
Selling and distribution expenses
 
4Q12
4Q11
% Var.
2012
2011
% Var.
Personnel expenses
3.7
3.6
2.8%
14.0
10.1
39.6%
Advertising and promotion
3.2
3.0
6.7%
10.8
8.4
28.6%
Other
2.4
2.1
14.3%
6.1
5.2
17.3%
Total
9.3
8.7
6.9%
       30.90
23.7
30.4%
 
During 4Q12, selling and distribution expenses remained similar to those in 4Q11. However, at the end of 2012, selling expenses rose approximately 30% as a consequence of the Company’s commercial strategy, which consists of creating brand loyalty among distributors and end users of its products. For this reason, personnel, advertising and promotional expenses increased.  It is important to note that the total amount spent in advertising and promotion is less that 1% of sales.
 
 
10
 

 
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EBITDA Reconciliation:
 
 
Consolidated adjusted EBITDA
 
4Q12
4Q11
2012
2011
Net Income
38.9
26.1
155.6
65.5
     + Income tax expense
24.5
19.6
73.7
38.3
     - Finance income
-5.4
-0.7
-23.3
-2.7
     + Finance costs
4.8
6.1
23.8
19.2
     +/- Net (loss) gain from exchange rate
-0.5
0.0
0.7
-1.4
     + Depreciation and Amortization
11.0
13.3
48.0
47.6
    + Deterioro de activos mineros
0.0
-0.1
0.0
96.0
    + Workers’ profit sharing        
    expenses related to the
0.0
4.7
0.0
4.7
    sale of an interest in FdP        
Consolidated adjusted EBITDA
73.3
69.0
278.5
267.2
EBITDA from FdP y Salsud *
5.0
1.1
13.6
3.6
Cement EBITDA
78.3
70.1
292.1
270.8

Consolidated adjusted EBITDA (in million of Nuevos Soles S/.)

* Corresponds to EBITDA from projects for Fosfatos del Pacifico and Salmueras Sudamericanas which are not linked to the cement business and are currently in pre-operating stages, therefore they are not generating revenues.
 
Consolidated adjusted EBITDA9 increased 6.2%, equivalent to S/. 4.3 million in 4Q12 compared to 4Q11, reaching a total of S/. 73.3 million.
 
It is worth noting that Consolidated Adjusted EBITDA was negatively affected by expenses incurred for the Fosfatos del Pacifico and Salmueras Sudamericanas projects, which do not generate revenues as both are currently in the pre-operating phase. Excluding the previous statement, Cement EBITDA increased 11.7%, equivalent to S/. 8.2 million compared to 4Q11. Additionally, during 2012, Cement EBITDA grew 7.9%, or S/. 21.3 million, compared to 2011, reaching S/. 292.1 million.

   
9 Consolidated Adjusted EBITDA excludes a non-cash loss due to an impairment provision taken on zinc mining assets due to a sudden and sharp drop in the international price of zinc in September 2011 and based on our expectation of future zinc prices. Likewise, it excludes workers´profit sharing related to the sale of an interest in the subsidiary Fosfatos del Pacífico.
 
 
11
 
 
 
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  Cash flows:
(in million of Nuevos Soles S/.)
 
 
Cash Flows
 
4Q12
4Q11
2012
2011
Net cash flows provided by operating activities
12.7
35.4
99.7
132.3
         
Net cash flows used in investing activities
-138.7
-60.7
-667.4
-239.2
         
Net cash flows provided by (used in) financing activities
-3.7
347.9
273.7
316.0
 
Net cash flows provided by operating activities
Net cash flow from operating activities in 4Q12 decreased compared to 4Q11 as a result of further disbursement of payment to suppliers. Similarly, net cash flows from operating activities in 2012 decreased compared to 2011, mainly due to higher tax payments (January 2012) due to the sale of 30.0% of the Company’s subsidiary Fosfatos del Pacifico S.A. to a subsidiary of Mitsubishi, as well as the purchase of imported clinker, among others.

Net cash flows used in investing activities
The increase in cash flows used for investing activities in 4Q12 compared to 4Q11 was mainly explained by the advance payment for equipment for the new Piura plant. Furthermore, the increase in cash flows for investing activities in 2012 compared to 2011 was mainly due to the certificates of deposit realized during the period.

Net cash flows provided by (used in) financing activities
The decline in net cash flows provided by (used in) financing activities during 4Q12 compared to 4Q11 was mainly due to the fact that during 4Q11, the Company received cash from a loan with BBVA, and the sale of 30.0% of Company’s subsidiary Fosfatos del Pacifico S.A. to a subsidiary of Mitsubishi, as well as dividend payments during 4Q12.

Furthermore, the decrease in net cash flows provided by (used in) financing activities during 2012 when compared to 2011 was due to cash received from the IPO at The New York Stock Exchange, which were offset by prepaid debt. In the previous year the Company received cash from bank loans and the sale of 30.0% of Company subsidiary Fosfatos del Pacifico S.A. to a subsidiary of Mitsubishi.

Cash and Debt Position:

Consolidated Cash (in millions of Nuevos Soles S/.):
 
As of December 31, 2012, the Company’s cash position was S/. 473.8 million (US$ 185.7 million). This balance includes certificates of deposits for S/. 434.0 million (US$ 170.1 million) distributed as follows:
 
 
Amount (S/.)
Interest Rate
Initial Date
Maturity Date
BBVA Banco Continental
S/. 202.2
4.25%
04 de enero 2012
June 27, 2013
Banco de Crédito del Perú
S/. 201.8
4.10%
23 de febrero 2012
August 16, 2013
Other deposits
S/. 30.0
      
         
Total
S/. 434.0
      
 
 
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Other deposits corresponded to certificates of deposit in Peruvian Nuevos Soles and in U.S. Dollars with maturities less than 30 days.

The remaining balance of S/. 39.8  million (US$ 15.6 million) is held in Company bank accounts.


Debt Position:

Consolidated Debt (in millions of Nuevos Soles S/.)

As of December 31, 2012, the Company reported total outstanding debt of S/. 215.5 million (US$ 84.5 million), which corresponded to a loan with BBVA Banco Continental in December 2011 for S/. 202.2 million. This loan has an interest rate of 6.37% in the first year, 6.64% in the second year and 7.01% in the years that follow. This loan is due December 2018.

Additionally, the Company reported a bank overdraft of S/. 13.3 million.

Below are the contractual obligations with payment deadlines related to the Company’s debt, including interest:
 
 
Payments due by period
 
Less than 1 year
1-3 Years
3-5 Years
More than 5 Years
Total
Indebtedness
22.9
115.5
77.1
0.0
215.5
Future interest payments
13.0
27.1
5.6
0.0
45.7
Total
35.9
142.6
82.7
0.0
261.2
 
Capex

Capex (in millions of Nuevos Soles S/.)

As of December 31, 2012, the Company invested S/. 270.2  million, allocated to the following projects:
 
Projects
2012
Construction of diatomite brick plant
10.6
Expansion of Rioja Plant
                57.2
Expansion of Pacasmayo Plant
                16.8
Piura Plant Project
                52.8
Phospate Project
                23.7
Brine Project
                18.3
Other investing activities*
                90.8
Total
             270.2
   
* Includes capital expenditures in the Pacasmayo and Rioja plants, as well as investments in machinery, equipment and overhauls.
 
 
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Projects:

Fosfatos del Pacífico S.A.

In December 2011, the Company sold a 30.0% stake in the Fosfatos del Pacifico S.A. subsidiary for S/. 124.4 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 2.0 million metric tons of phosphate per year with the option to buy an additional 0.5 million metric tons per year. The agreement has a term of 20 years.

The Company is currently in the final stage of pilot tests in order to confirm laboratory tests and obtain as much information as possible with regards to developing this project’s basic engineering .
 
Furthermore, continuing with the project schedule, the Company 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, in addition to Pepsa Tecsult and Aecom to study the electrical transmission and water.  The Company expects the basic engineering study to be completed during the first half of 2013, which will more accurately measure the project’s advancement. It is estimated that the phosphates project will be operational in 2016.

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 has a 74.9% stake, with Quimpac holding the remaining 25.1%.
 
Currently, the Company is in the basic engineering development stage with German company, K-UTEC AG Salt Technologies, which has over 50 years of experience in the salt business, which will provide accurate information with which to measure the size of the industrial complex and provide more details regarding the production process.

Due to the complexity of our brine project, and in accordance with our strategy of disciplined capital expenditures, in order to develop this project we must first obtain the results of the basic engineering study and the local community agreements for the exploitation of these mineral resources.

 
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Recent Events

●  
CEMENTOS PACASMAYO ANNOUNCES PRIVATE OFFERING OF US$300 MILLION IN SENIOR NOTES IN THE INTERNATIONAL MARKET – The Company undertook its first international bond issuance, placing US$300 million in Senior Notes (“The Notes”) due in 2023. The Bonds were rated “BBB-“ by Fitch Ratings and BB+”by Standard & Poor’s. For this issuance, the Company traveled to Santiago, Lima, Bogota, London, Los Angeles, Boston and New York to market the deal. The offering was completed on February 1, 2013, and had a demand of over US$ 2.5 billion. The Company’s US$ 300 million Senior Notes issuance has a coupon of 4.50% and a yield to maturity of 4.625%. On February 8, 2013 the Company successfully closed the Note offering, which was registered with the Irish Stock Exchange. Proceeds from this bond have been allocated to prepay existing debt with BBVA Banco Continental (S/. 202.2 million plus interest). The remaining proceeds will be used for the new Piura plant.
 
 
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About Cementos Pacasmayo S.A.A.
Cementos Pacasmayo S.A.A. is a leading Peruvian cement company, and the only cement manufacturer 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 54 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/accionistas/
 
 
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          Fourth Quarter 2012 Earnings Release
 
 
 

Note: The Company presented some figures converted from nuevos soles to U.S. Dollars for comparison purposes. The exchange rate used to convert Nuevos Soles to U.S. dollars was S /. 2.551 per US$ 1.00, which was the exchange rate reported as of December 31, 2012 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.
 
Note on Forward-Looking Statements
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.
 
 
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          Fourth Quarter 2012 Earnings Release
 
Consolidated statements of financial position
        
As of December 31, 2012 and December 31, 2011
  
             
Assets
  
As of December-2012
S/. (000)
    
As of December-2011
S/. (000)
  
Current assets
            
Cash and short-term deposits
     473,785       363,279  
Trade and other receivables
     69,395       78,377  
Income tax prepayments
     21,464       705  
Inventories
     278,149       206,102  
Prepayments
     10,616       11,629  
      853,409       660,092  
                 
Assets
  
As of December-2012
S/. (000)
    
As of December-2011
S/. (000)
  
Non-current assets
                
Other receivables
     36,110       29,146  
Available-for-sale financial investments
     34,887       22,074  
Property, plant and equipment
     1,394,835       1,197,401  
Exploration and evaluation assets
     49,486       29,895  
Deferred income tax assets
     13,438       7,813  
Other assets
     1,159       1,404  
      1,529,915       1,287,733  
                 
Total assets
     2,383,324       1,947,825  
 
Liabilities and equity
  
As of December-2012
S/. (000)
    
As of December-2011
S/. (000)
  
Current liabilities
            
             
Trade and other payables
     132,764       128,485  
Interest-bearing loans and borrowings
     22,884       139,048  
Income tax payable
     75       12,870  
Provisions
     24,029       28,694  
      179,752       309,097  
                 
Liabilities and equity
  
As of December-2012
S/. (000)
    
As of December-2011
S/. (000)
  
Non-current liabilities
                
Interest-bearing loans and borrowings
     192,571       451,546  
Other non-current provisions
     16,578       10,909  
Deferred income tax liabilities, net
     100,308       102,688  
      309,457       565,143  
                 
Total liabilities
     489,209       874,240  
                 
                 
Equity
  
As of December-2012
S/. (000)
    
As of December-2011
S/. (000)
  
                 
Capital stock
     531,461       418,777  
Investment shares
     50,503       49,575  
Additional paid-in capital
     558,478       -  
Legal reserve
     105,221       90,451  
Other components of equity
     16,711       8,029  
Retained earnings
     570,878       473,721  
                 
Equity attributable to owners of the parent
     1,833,252       1,040,553  
Non-controlling interests
     60,863       33,032  
                 
Total equity
     1,894,115       1,073,585  
                 
Total liabilities and equity
     2,383,324       1,947,825  

 
 
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          Fourth Quarter 2012 Earnings Release
 
Consolidated income statements
                        
                         
For the three and six-month periods ended Decemeber 31, 2012 and 2011
  
    4Q12     4Q11     2012     2011  
    S/.(000)     S/.(000)     S/.(000)     S/.(000)  
                         
Sales of goods
     316,958       277,304       1,169,808       994,970  
Cost of sales
     (188,151 )     (154,239 )     (713,058 )     (569,515 )
Gross profit
     128,807       123,065       456,750       425,455  
                                 
Otros ingresos (gastos) operativos
                                
                                 
Administrative expenses
     (62,941 )     (66,588 )     (203,067 )     (196,196 )
Selling and distribution expenses
     (9,264 )     (8,658 )     (30,865 )     (23,707 )
Other operating (expenses) income, net
     5,752       3,128       7,706       9,338  
Impairment of zinc mining assets
     -       106       -       (95,994 )
Total operating expenses , net
     (66,453 )     (72,012 )     (226,226 )     (306,559 )
                                 
Operating profit
     62,354       51,053       230,524       118,896  
                                 
Operating income (expenses)
                                
                                 
Finance income
     5,381       732       23,326       2,695  
Finance costs
     (4,836 )     (6,103 )     (23,771 )     (19,219 )
Net (loss) gain from exchange difference
     451       7       (736 )     1,476  
                                 
Total other expenses, net
     996       (5,364 )     (1,181 )     (15,048 )
                                 
Profit before income tax
     63,350       45,689       229,343       103,848  
                                 
Income tax expense
     (24,410 )     (19,578 )     (73,743 )     (38,379 )
Net income
     38,940       26,111       155,600       65,469  
                                 
Attributable to:
                                
Owners of the parent
     39,861       28,252       159,005       67,694  
Non-controlling interests
     (921 )     (2,141 )     (3,405 )     (2,225 )
                                 
                                 
Earnings per share
                                
Basic and diluted for the three-month period
attributable to holders of common shares and
investment shares  of the parent (S/. per share)
     0.07       0.06       0.28       0.14  
Net income
     38,940       26,111       155,600       65,469  
 
 
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          Fourth Quarter 2012 Earnings Release

Consolidated statements of changes in equity
                                                            
For the years 2012 and 2011
                                                            
                                                             
   
Attributable to owners of the parent
              
   
Capital
stock
S/. (000)
    
Investment
shares
S/. (000)
    
Additonal
paid-in capital
S/. (000)
    
Legal
reserve
 S/. (000)
    
Available-for-sale
reserve
S/. (000)
    
Foreign currency
translation reserve
S/. (000)
    
Retained earnings
S/. (000)
    
Total S/. (000)
    
Non-controlling interestsS/. (000)
    
Total
equity S/. (000)
  
   
 
                                                        
Balance as of December 31, 2010
     418,777       49,575       -       74,145       15,374       (983 )     435,668       992,556       739       993,295  
profit for the year
     -       -       -       -       -       -       67,694       67,694       (2,225 )     65,469  
Other comprehensive income
     -       -       -       -       (6,117 )     (245 )     -       (6,362 )     (29 )     (6,391 )
Total comprehensive income
     -       -       -       -       (6,117 )     (245 )     67,694       61,332       (2,254 )     59,078  
                                                                                 
Dividends
     -       -       -       -       -       -       (91,000 )     (91,000 )     -       (91,000 )
Incorporation of non-controlling interests
     -       -       -       -       -       -       77,665       77,665       34,547       112,212  
Appropriation of legal reserve
     -       -       -       16,306       -       -       (16,306 )     -       -       -  
                                                                                 
Balance as of December 31, 2011
     418,777       49,575       -       90,451       9,257       (1,228 )     473,721       1,040,553       33,032       1,073,585  
Profit for the year
     -       -       -       -       -       -       159,005       159,005       (3,405 )     155,600  
Other comprehensive income
     -       -       -       -       8,969       (287 )     -       8,682       (34 )     8,648  
Total comprehensive income
     -       -       -       -       8,969       (287 )     159,005       167,687       (3,439 )     164,248  
                                                                                 
Proceeds from the issue of common shares
     111,484       928       561,191       -       -       -       -       673,603       -       673,603  
Appropriation of legal reserve
     -       -       -       14,770       -       -       (14,770 )     -       -       -  
Dividends
     -       -       -       -       -       -       (52,000 )     (52,000 )     -       (52,000 )
Contribution of non-controlling interests
     -       -       -       -       -       -       -       -       28,557       28,557  
Sale of treasury shares
     1,200       -       -       -       -       -       4,922       6,122       -       6,122  
Other adjustments of non-controlling interests
     -       -       (2,713 )     -       -       -               (2,713 )     2,713       -  
Balance as of Decemeber 31, 2012
     531,461       50,503       558,478       105,221       18,226       (1,515 )     570,878       1,833,252       60,863       1,894,115  



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