Good day, ladies and gentlemen. Welcome to the Cementos Pacasmayo's Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. And please note that this call is being recorded. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. I would now like to introduce our host for today, Ms. Claudia Bustamante, Investor Relations Manager. Ms. Bustamante, you may begin.

Thank you, Matthew. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer, and Mr. Manuel Ferreyros, our Chief Financial Officer. Mr. Nadal will begin our call with an overview of the quarter focusing primarily on our strategic outlook for the short and medium-term. Mr. Ferreyros will then follow with additional commentary on our financial results. We'll then turn the call over to your questions. Please note that this call will include certain forward-looking statements. These statements relate to expectations, beliefs, projections, trends and other matters that are not historical facts and are therefore subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company's regulatory findings. With that, I'd now like to turn the call over to Mr. Humberto Nadal.

Thank you, Claudia. Welcome everyone to today's conference call. This quarter, we saw a slight decrease in volumes which was offset by higher prices of both cement and concrete, as well as the improved sales mix favoring higher margin cement and building solutions. These all lead us to an increase in revenues of 10.4%. This improvement was also reflected in quarterly EBITDA, which reached an outstanding $141.5 million, the highest in company history. In terms of annual results, revenues increased almost 50% compared to 2020. Because a bag of cement continues to represent most of our sales, it is important to mention that in 2021, concrete based on motor sales increased almost 70% when compared to the same period last year. This is truly remarkable and aligned with our strategy to become a building solutions provider. We're extremely pleased with these results. But we're also aware that it's want to be a very difficult task to surpass these record levels. So our goal for 2022, which is still an extremely challenging one, is to maintain current sales volume levels. You have to keep in mind that we went from selling 2.6 million tons in 2019 or 23.6 million tons in 2021, which means an increase is almost 40%. I would like to take this opportunity to review the year as a whole and to focus on our strategic view for future. As mentioned before, this year, which is unprecedented sale levels of sales and EBITDA. This is undeniably exceptional and beyond any estimates and got our rationality calculated at the beginning. As we have mentioned before, the market conditions are positive through out the Country, as it is evidenced by our increased national market share. We have also managed to grow above the national average. Part of this is irrational…

Thank you, Humberto. Good morning, everyone. Fourth quarter 2021 revenues were 524.9 million and 10.4% increase when compared to the same period of last year, mainly due to increased bag of cement prices, as well as concrete sales, which performed very well this quarter. Gross profit increased 7.6% in the fourth quarter compared to the same period last year, mainly due to the increase in sales mentioned before, partially offset by higher costs as we had to use imported [Indiscernible]. Consolidated EBITDA was $141.5 million in the fourth quarter of 2021, the highest in the history of the company, and 18.5% increase when compared to a fourth-quarter 2020, mainly due to increased sales. For the full year, revenues increased 49.5%. As Humberto mentioned. And EBITDA increased 44% mainly due to increased sales volume. Pricing of both cement and concrete, as well as a more favorable sales mix since we sold higher margin types of cement. This is the highest EBITDA in company history. Despite having use of significant amount of imported clinker, which increased our production costs. Turning to operating expense and we intuitive expenses for the fourth quarter decreased 4.7% compared to the same period of last year. Mainly due to the increase in personnel expenses, and donations, which were high due to COVID-19 during 2020. During 2021, administrative expenses increased 20% when compared to 2020, mainly due to the increased workers profit sharing in line with increased income tax base, increase in the exchange rate, as well as an increase in third-party services mainly covered related expenses to comply with protocols to ensure the safety of our workers. It is also important to know that administered -- to note that administrative expenses during the period of 2020 were low due to budget restrictions after the halt in production…

Certainly. Ladies and gentlemen, the floor is now open for questions. [Operator Instruction]. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Thank you. Your first question is coming from Adrian Huerta. Please announce your affiliation, then pose your question.

Thank you. I'm Huerta from JP Morgan. Hi, Humberto and Manuel. Thank you for taking my question and congrats on the results. My question has to do with demand. If you can just tell us what was the growth on cement demand from self-construction during the full year? And what percentage of your volumes last year was for the reconstruction efforts done in the country?

Hi, Adrian. Good to hear from you. I think, I mean, it gives you the mine was really outstanding. Like, I mean, 2019, which was the previous record a year we were around 2.6 million tons in 2020, even through -- after two months of lockdown, we were closer to 2.6 million, and last year, the cost were 3.6, which is 38% higher. Reconstruction was not that relevant. I mean, it was probably on the 2%. So really what we are seeing is extremely strong demand from the informal sector. We're going to see much more reconstruction coming on this year when all other projects materialize. But like I see, I mean, it has to do a lot with high employment levels in terms of agriculture or fishing, even construction. And that's all generating demand. And also, we believe that when people -- you lock people in the houses for so many months they realize that their houses probably need some improvement, some things need to be made, or even some younger families they try to find a new home. So I think our firm demand has been from there. And point number two, I mean, we're -- we've been pushing 2017 building solutions. That is also very important so we were selling cement basis probably before we were still working and clay bricks were being sold. So I think it's a combination of all those things.

[Indiscernible] and thank you, Humberto and if I may add another question. Growth on prices throughout the whole year, 3%, 4% the quarter it was even a bit strong in the fourth quarter, was there another increase this year? And what is the and how you want to try to catch up at least with the inflation that you had last year for this year?

Last year overall, in the year we -- our price increase was close -- was above 15%, which I think was very important to keep profitability. It was way above the inflation rate of 7%. I don't recall in all the years as CEO, we were able to rule out -- and we will keep this here, seeing there's a small opportunities to raise prices. But we're already at our level of [Indiscernible] rates. It's extremely, extremely competitive.

Thank you. It's on all price increases so far this year, even in January, you didn't not have price increase in January?

We moved a little bit of price on January, yes.

Okay. Thank you.

Thank you, Adrian. Take care.

Thank you. There are no further questions in the queue at this time. We'll now switch to webcast questions.

Okay. I have a question for Paulo Ricardo. Can you provide additional information on the changes in sales mix use all during the quarter? And if you expect this favorable mix effect to continue in 2022.

Yes. The public infrastructure, they spend more expensive or more profitable a type of cement. And also the self-construction they're pushing into the MF cement that is a little bit more profitable than the all-purpose cement. Hopefully that answers the questions.

Yes, thank you. The next question is from a Louis Ramal (ph). What are your expectations for volumes in 2022? How much of this dynamic will come from reconstruction project? And the second part, could you provide more color on the mix improvement, which I think we just --

That's the volume like I said in my representation. I mean, 3.6 million tons of cement is really an incredible volume. I mean, we used to have 20% of the national demand and we're up to 27%. So I think if we manage to keep the volumes at higher prices will be an outstanding results. In terms of reconstruction, 2022 will be south of 2%, so it's not really a relevant number, in 2023 that we will have to grow to 5%.

[Indiscernible] question, we have one on what are your targets for sales and margins for 2022

In terms of sales like I mentioned before, 3.6 million tons. And therefore, in terms of margins, our idea is to have our 25.2%. [Indiscernible]

Regarding prices, do we foresee them to remain or will competition drive prices down as supply chain return to pre -pandemic levels?

Like I mentioned before, we were able to buy substantial price increase in the -- over the last year, even the last quarter. Our recent revenues went up 10%, even though sales were down 6%, as to [Indiscernible] fundamentally with priced. We have started moving a little bit on January and February this year. So we're going to keep watching the competitive situation. And depending on that we're going to see if prices can still be increased.

A couple of questions on the dividend. We have our first question from [Indiscernible] from [Indiscernible] regarding dividends. You mentioned dividends of $0.75 per share. That is about 300 million. 2022 accumulated results are not enough. From which accounts will you take the general [Indiscernible]?

A year to keep in mind that you mind that I mean, the dividend payout of this year was absolutely exceptional for many, many resources. And I'm sure investors understand. This year we should go back more to what we're normal levels in the past, but we're still recovering from a very high dividend this past year. And also the fact that we gave out most of our return -- return earnings. So we're going to have to see how the results coming in a first two quarters of this year. And probably will go to a level somewhere south of what it was before the pandemic.

Moving on to a question from [Indiscernible] from Ashmore. How do you see competition under this environment of strong demands and higher prices? Could you provide financial guidance for '22 and CapEx needs for 2023?

Well, in terms of competition, I mean, with a dollar heating Fortinet's up by even those one back to 380, its very much less competitive for people to import either thing or cement. So I think we are pretty much, I'm not saying non-concern, but less concern that we were pre -pandemic levels, and it seems to us that the logistic chain in the world's still remains extremely, extremely expensive and confusing. This year I was in competition will be a huge issue in terms of --

This should be similar as the last year. So 2021 of around $100 million.

Yes, so it was basically around $20 million plus.

That doesn't include the visual Capex for the Pacasmayo upgrade over the queue number four.

And then finally from [Indiscernible] from [Indiscernible], what are the expected levels of SG&A? We expect this levels will be recurred? So similar to --

Yeah should be similar to 2021. Okay. Thank you everybody for the questions and closing up the year 2021 has been remarkably successful year in so many friends. We saw record sales volume that lead us to the site in these Pacasmayo optimization investment in order to supply the clinker needed. This decision worth taken within an uncertain macro environment you will be very profitable for the company. And it really ratifies our commitment to the company's development. I think commitment has to be verified when things are maybe shady, maybe complicated, maybe uncertain. But we are here more than 60 years. I'm absolutely convinced we'll remain here in Peru, fully committed to our country for many more decades to come. I have to really mentioned also that none of these achievements. Again, I stress the word none, could have been possible without the talented, an outstanding group of professionals that make up Pacasmayo, they are the reason we achieved every single goal we achieved every year. The plus two years have been extremely challenging for all of us, both on the personal professional level, and the commitment and the level of engagement you have from our team, it's undoubtedly the biggest source of our success. We will be absolutely nothing without our team, without our people. Our challenge now is to sustain our current financial results and continuing proving our sustainability management. The independent foundation that we allow for prosperous future. As we now prepare to hopefully leave COVID behind, also, we have an enormous challenge in the way we want to go back to the office in a way you want to go back and fundamentally centered in our people's well-being and fundamentally centered in always being close to our client. Thank you very much for taking the time today. And as always, Manuel, Claudia, and myself we're always here, if you have anymore questions. Have a nice day and please stay safe.

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.