Unacem, Pacasmayo increase cement sales

Friday, November 10, 2017

Lima-based cement producers Unacem and Cementos Pacasmayo both posted higher cement sales in 3Q17 as the country began to recover from record flooding earlier this year.

Unacem posted a 35.5mn-sol (US$11mn) profit in 3Q17 compared with a 4mn-sol loss in 3Q16 as sales rose to 502mn soles from 465mn soles, the company said in a corporate filing to securities regulator SMV.

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The company also posted an 8.3mn-sol FX loss compared with a 78.8mn-sol FX loss in 2016.

Cement production rose 5.8% to 1.29Mt in the quarter, while clinker production fell 15% to 844,349t due to maintenance work at two of its plants. Exports rose to 630,000t through the first three quarters from 355,000t the previous year. Cement sales rose by 6.8% to 1.29Mt.

Unacem said its domestic market share climbed to 47.4% through September from 47% a year earlier. Capex totaled 86mn soles through 3Q17 including investments at its Condorcocha and Atocongo plants and Carpapata 3 hydroelectric project, the company said said.

Pacasmayo's sales rose 6.5% to 219mn soles from 206mn soles but its third-quarter profit dropped 12.8% to 38.8mn soles from 44.5mn soles a year earlier, the Lima-based company said in a corporate filing to SMV.

Cement production rose 7.5% from last year to 534,200t , while clinker production dropped 33.6% to 335,600t due to plant maintenance; quicklime output rose 57% to 54,200t.

Pacasmayo and Unacem expect cement sales to rise as work gets underway next year on a 25bn-sol (US$8bn) reconstruction program after record flooding and landslides sparked by the El Niño phenomenon this year left 163 dead and 291,000 homeless, and destroyed roads, bridges and railway lines.

"Self-construction and the progressive reactivation of smaller-scale infrastructure were the engine for the sector," Credicorp Capital analyst Diego Cavero wrote in a report. "With the approval of the reconstruction plan, sales are expected to rise in the short term for the company as 70% of total investment will be allocated to its market."

Pacasmayo is also counting on rising demand from an estimated US$24bn in investment projects in northern Peru, including the US$3.5bn Talara refinery expansion and the longitudinal highway.