Peru's Cosapi boosts 2015 profits on cost cutting

Peruvian construction and engineering firm Cosapi reported an 11.1% increase in earnings for last year as lower costs offset a drop in revenue.

Net income rose to 58.6mn soles (US$17mn) from 52.8mn soles in 2014 due to lower financial costs, according to a corporate filing to securities regulator SMV. Revenues fell 11.1% to 1.31bn soles from 1.48bn soles, while sales costs fell 20.2%.

The Lima-based company, which sold 70mn soles in bonds in September, said it slashed debt to 767mn soles from 908mn soles a year earlier.

Cosapi, which built up a US$1.63bn backlog through December 31, said engineering and construction contracts account for over half of the backlog, followed by mining (25%) and concessions (20%). The company aims to finish 314mn soles in business this year, followed by 232mn soles in 2017 and 236mn soles in 2018, with the rest to be completed from 2019 onwards.

The company, whose contracts include line No. 2 of the Lima metro, state oil company Petroperú's Talara refinery expansion and the US$550mn Majes-Siguas II irrigation project, said it secured six construction contracts totaling US$90mn and a US$6.5mn mining contract with Barrick Gold in the fourth quarter.

Last year Cosapi completed the first stage of a US$534mn contract for the Shougang Hierro Perú expansion project, installed a concentrator plant for Freeport-McMoRan's Cerro Verde expansion and finished the Lima headquarters of state bank Banco de la Nación. Cosapi also started work on the 396-apartment Duplo housing project in Lima.

Cosapi's results go against a trend in Peru's construction sector, where engineering firm Graña y Montero and cement producer Unacem both saw their profits plunge by more than half last year due to rising costs and FX losses.

Construction and cement companies are betting that a government drive to award public-private partnership concessions for more than US$20bn, a US$64bn mining portfolio and US$33bn in energy projects will boost industry growth.

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