Cementos Pacasmayo S.A.A. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, ladies and gentlemen. Welcome to Pacasmayo's First Quarter 2024 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 your host for today's call Mrs. Claudia Bustamante, Investor Relations Manager. Mrs. Bustamante, you may begin.
Claudia Bustamante: Thank you Tim. 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 are related 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 filings. With that, I'd now like to turn the call over to Mr. Humberto
Humberto Nadal: Thank you, Claudia. Welcome everyone to today's conference call and thank you for joining us today. This quarter we delivered very solid results in terms of margins, EBITDA and profitability. Although, sales volumes continued to lag behind because of demand side challenges, we were able to achieve a consolidated EBITDA of PEN132.8 million, a 10% solid increase year-over-year, as well as a 13.8% increase in net income by focusing on operational efficiencies related to clinker production and our most efficient kilns. Northern Peru was impacted by climatic effects such as higher temperatures and increased water temperatures, which in turn affected agriculture and fishing. For example, mangoes, one of the main crops in Northern Peru, experienced a drastic decrease in production during the 2023, 2024 agricultural campaign.
This translates into decreased disposable income, which in turn affects self-construction. Additionally, there is a general lack of safety in the country, specifically the northern part of Peru, mainly in the form of extortions that are affecting overall economic activity including, and I would say, especially self-construction. We hope that these demand side challenges can be reverted and we are confident that when they do we're in the best possible position to tackle the resultant increase in demand. In our journey to continue developing our building solutions, we recently embarked on the reconstruction of the two runways and the perimeter fence of the Piura Airport, not only as a concrete and pavement provider but for the first time directly involved in the construction as part of a consortium.
The way in which we are approaching this project is different from our airport improvement projects, we have provided concrete for in the past since we are in this case actively participating in every step, beginning with prospection and ending with the actual delivery of the finished infrastructure project. We firmly believe that involving in every part of the process brings invaluable insights and create significant opportunities to promote improve and market our building solutions looking towards the future. I would like now to focus on something that is absolutely crucial for the future of all businesses and organizations including our own: artificial intelligence and machine learning. New technologies will bring a wide variety of opportunities and there is no doubt that early adopters will be the biggest beneficiaries.
A worker operating heavy machinery on a large construction site, at the center of a bustling city skyline.
And we intend to be one. As a company, we're focusing on both developing and adopting digital tools and reinforcing the culture to adopt it. As I mentioned earlier, one of the ways in which we look to gain traction on the building solutions market is by doing prospection work. This is mostly focused on looking for infrastructure opportunities in the initial phase, so we can get involved in the definition of materials required, hence creating and capturing more value for our building solutions. We have recently developed a model that uses AI to identify all of the pilot infrastructure projects in our area of influence. The robot developed in this project can capture the information and feed it into a large database, allowing the team to focus on the actual development of a solution instead of spending valuable time scouting for projects.
Moreover, this tool generates valuable information to guide our data-driven analysis and with data to enhance our portfolio of products and services – and tailored to the needs of our customer. I will now turn the call over to Manuel to go into more detailed financials. Manuel?
Manuel Ferreyros: Thank you, Humberto. Good morning, everyone. As Humberto mentioned, our first quarter 2024 revenues were affected by a decrease in demand, reaching PEN476.5 million, a slight decrease of 0.7% when compared to the same period of last year. However, the gross profit increased, achieving PEN173.9 million, an 8.3% increase when compared to the same period of last year, mainly due to reduced production costs as we maximized the use of our most efficient kilns and benefit from lower cost of raw material. The consolidated EBITDA was PEN132.8 million this quarter, a 10% increase when compared to the first quarter of 2023. And EBITDA margin was 27.9%, a 2.8 percentage point increase when compared to the first quarter of 2023.
Turning to operation expenses. Administrative expenses for the first quarter of 2024 remained in line with those of the first quarter of 2023. Selling expenses during this quarter increased 9.1% when compared to the same period of last year, mainly due to increase in personnel expenses, in line with inflation as well as software and licenses and higher provision for the doubtful payment. Moving on to the different segments. Sales of cement decreased 4.6% this quarter when compared to the same period of 2023, mainly due to decreased sales volume in the self-construction segment, mainly because of the negative -- effects as well as low levels of private and public investments. Nonetheless, gross margin increased 5.2 percentage points in this quarter compared to the same period of last year, mainly due to the lower clinker production costs associated to the use of most efficient kilns, as well as the lower cost of coal.
During this quarter, concrete, pavement and mortar sales performed very well, increasing 73.8% compared -- when compared to the first quarter of last year. This increase was mainly due to the increased sales of pavement for the Piura Airport. Gross margin decreased by 2.5 percentage points this quarter when compared to the same period of last year, mainly due to changes in the composition of our sales portfolio. Finally, the net profit increased 13.8% this quarter when compared to the same period of last year, mainly due to the operational efficiencies mentioned above. In terms of debt, our net debt-to-EBITDA ratio was 3.2 times, which is a level we expect to reduce in the future. To summarize this quarter's results, show our ability to manage costs and focus on profitability when faced with challenges on the demand side.
We are confident that we will continue delivering positive results during the rest of the year. Operator, can now we please open the floor for questions?
