20-F: Cementos Pacasmayo Reports 2025 Financials Amid Holcim Acquisition

Cementos Pacasmayo S.A.A. has released its 2025 annual report, detailing financial performance and operational updates, including the significant change of control following Holcim's acquisition.

Summary

• Cementos Pacasmayo S.A.A. filed its Form 20-F for the fiscal year ended December 31, 2025, reporting on its financial performance and operational activities.
• The filing highlights the completion of Holcim Ltd's acquisition of a controlling stake in the company on March 30, 2026, following an agreement from December 15, 2025.
• The company's financial results for 2025 show a decrease in profit for the year, attributed partly to expenses related to the Holcim acquisition.
• Sales of goods increased by 7.0% to S/2,116.9 million, driven by higher cement sales volumes and prices, although pavement sales revenue decreased significantly due to the nearing completion of the Piura airport project.
• The company's gross profit increased by 10.8% to S/806.9 million, with a gross profit margin of 38.1%, an improvement from the previous year, attributed to operational efficiencies and lower raw material costs.
• Administrative expenses increased by 15.0% primarily due to higher personnel expenses related to union negotiations and a closing bonus.
• Net cash flows from operating activities increased by 12.3% to S/360.6 million, while net cash flows used in investing activities increased due to higher purchases of property, plant, and equipment.
• The company's total outstanding debt as of December 31, 2025, was S/1,412.2 million.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as mixed; while operational performance and sustainability efforts show positive trends, the significant increase in expenses related to the Holcim acquisition and the resulting decrease in profit are notable negatives. The change in control introduces strategic uncertainty.

Positives

• Total sales of goods increased by 7.0% to S/2,116.9 million in 2025, primarily due to an 8.3% increase in sales of cement, concrete, mortar, pavement, and precast.
• Gross profit increased by 10.8% to S/806.9 million in 2025, with the gross profit margin improving to 38.1% from 36.8% in 2024, driven by operational efficiencies and lower raw material costs.
• Net cash flows from operating activities increased by 12.3% to S/360.6 million in 2025.
• The company maintained its inclusion in the Dow Jones Sustainability Index MILA Pacific Alliance for the seventh consecutive year and was selected for The Sustainability Yearbook 2026, achieving a score within the top 10% of S&P Global's Corporate Sustainability Assessment in the building materials industry.
• The company successfully maintained its product certification with no non-conformities identified in 2024 and 2025.

Negatives

• Profit for the year decreased by 22.5% to S/154.2 million in 2025 from S/198.9 million in 2024, mainly due to higher expenses associated with the indirect acquisition of the company by Holcim.
• Administrative expenses increased by 15.0% to S/291.5 million in 2025, primarily due to higher personnel expenses driven by collective bargaining negotiations with labor unions.
• Selling and distribution expenses increased by 14.0% to S/92.8 million in 2025, primarily due to increased advertising and promotion expenses and union bonuses.
• Other operating expenses increased significantly to S/75.5 million in 2025 from S/2.7 million in 2024, mainly due to one-off expenses associated with the indirect acquisition of the company by Holcim.
• Holcim intends to delist the Common Shares (traded in the form of American Depositary Shares) from the New York Stock Exchange and deregister the Common Shares under the Exchange Act once the Mandatory Tender Offer is completed.

Risks

• An investment in the company's common shares and ADSs is subject to significant risks, including global macroeconomic conditions, political and economic developments in Peru, and risks related to the company's business and industry.
• The company is subject to the possible entry of domestic or international competitors, which could decrease market share and profitability.
• Demand for cement products is highly related to housing construction in northern Peru, which is affected by regional economic conditions.
• A reduction in private or public construction projects in northern Peru would have a material adverse effect on the business.
• Increases in energy prices or shortages in energy supply, as well as third-party raw materials, could adversely affect the business.
• The company faces risks related to political instability in Peru, including potential shifts in fiscal policy and increased taxation.
• A depreciation or devaluation of the Sol could materially adversely affect the business, financial condition, and results of operations.
• The company is subject to increasingly stringent environmental, health, and safety regulations.
• Failures in information technology and information security (cybersecurity) systems can adversely impact operations and reputation.
• The change of control by Holcim Ltd could lead to shifts in strategy, management, and corporate governance, including a mandatory tender offer and potential delisting from the NYSE.

Future Outlook

The company's future outlook is significantly influenced by the change in control following Holcim's acquisition. Holcim may implement its 'NextGen Growth 2030' strategy, potentially prioritizing different capital allocation models, sustainability targets, or operational integration. Holcim is also obligated to launch a mandatory tender offer for the remaining outstanding shares under Peruvian law. Furthermore, Holcim has stated its intention to delist the company's ADSs from the New York Stock Exchange.

Management Comments

• The company's management believes that the expenses incurred in connection with the Holcim acquisition represent valid and pre-existing obligations.
• Management believes that its current efforts to reduce its carbon footprint will be sufficient to meet future regulatory requirements.
• Management believes that its current relationships with communities are constructive and expects this stability to continue.
• Management believes that its distribution network has enabled it to build strong recognition for the Pacasmayo brand, which is important to the business.
• Management believes that its current efforts to reduce its carbon footprint will be sufficient to meet future regulatory requirements.

Industry Context

StockSavvy.ai notes that the cement industry in Peru is competitive and largely segmented by region. The recent acquisition of Cementos Pacasmayo by Holcim Ltd, a global leader, signifies a consolidation trend in the Peruvian market. Holcim's expanded presence, now including Cementos Pacasmayo, positions it as a major player across multiple regions. The industry remains driven by cost structure optimization, regional dominance, and demand from self-construction, public infrastructure, and mining investments. The increasing importance of sustainability and digital transformation is also evident in the company's strategies.

Comparison to Industry Standards

• Cementos Pacasmayo's global clinker/cement ratio is estimated at 71.1%, which is below the average value for similar producers globally of approximately 75.0% (GCCA, 2023), indicating a potentially more efficient use of clinker.
• The company's inclusion in the Dow Jones Sustainability Index MILA Pacific Alliance Index for the seventh consecutive year and its top 10% ranking in S&P Global's Corporate Sustainability Assessment in the building materials industry for The Sustainability Yearbook 2026 highlight strong ESG performance relative to industry peers.
• The company's focus on blended cement, which requires less clinker and reduces carbon dioxide emissions, aligns with global industry trends towards sustainability.
• The company's digital transformation initiatives, such as Mundo Pacasmayo and Construye Experto, aim to professionalize construction workers and improve customer experience, reflecting a broader industry trend towards digitalization and customer-centric solutions.

Legal Proceedings

• The Peruvian Securities Commission (SMV) has requested information regarding certain expenses incurred and recorded in connection with the Holcim acquisition, which could potentially lead to formal administrative proceedings or shareholder disputes.

Related Party Transactions

• Lease of land adjacent to headquarters to Compaa Minera Ares S.A.C. for S/1,151,000 in 2025.
• Provision of back office management and administrative services to ASPI, Fossal, and Fosfatos del Pacifico for S/509,000 in 2025.
• Reimbursement of security services from Compaa Minera Ares S.A.C. for S/3,023,000 in 2025.

Stakeholder Impact

• Shareholders may experience volatility in ADS prices and potential delisting from the NYSE following the change of control.
• Employees may be affected by strategic realignments or operational integration resulting from Holcim's acquisition.
• The company's commitment to sustainability and community relations may be influenced by Holcim's global strategies and targets.

Next Steps

• Holcim is expected to launch a mandatory tender offer for the remaining outstanding shares.
• Holcim intends to delist the company's ADSs from the New York Stock Exchange.
• The company will continue to focus on its core business of supplying cement demand and deepening commercial relationships with retailers and end-consumers.
• The company will continue to strengthen its enterprise risk management methods and processes.
• The company will maintain high environmental, social, and governance standards.

Key Dates

Recommendation

The company's financial performance shows resilience in sales and gross profit, but the significant increase in expenses related to the Holcim acquisition and the resulting decrease in net profit are concerning. The strategic uncertainty introduced by the change of control and potential delisting from the NYSE warrants a cautious 'hold' stance until further clarity on Holcim's integration strategy and future performance is available.

Keywords

Cementos Pacasmayo, Form 20-F, Annual Report, Holcim Acquisition, Peruvian Cement Market, Financial Results, EBITDA, Gross Profit, Sales Volume, Construction Sector, Peru Economy, Corporate Governance, Sustainability Index, Mining Concessions, Resource Estimates