CEMENTOS PACASMAYO SAA Annual Report - How They Did This Year

I’ve put together a simple guide to help you understand how Cementos Pacasmayo performed this year. Think of this as a plain-English breakdown of their annual report to help you decide if this company fits your investment goals.

1. What does this company do?

Cementos Pacasmayo is the primary supplier of building materials in Northern Peru, specializing in cement, concrete, and quicklime. They hold a dominant market position in the region, where high transportation costs act as a natural barrier to competitors. You can find them on the New York Stock Exchange (symbol: CPAC) and the Lima Stock Exchange.

2. Financial performance: How did they do?

The company had a busy year in 2025, producing 3.05 million metric tons of cement, up from 2.83 million in 2024. Despite this increase in production, net profit fell to S/154.2 million, compared to S/198.9 million in 2024.

This dip in profit was driven by rising operational costs and one-time expenses related to the Holcim takeover, including executive compensation. Consequently, the company’s profit margin—the percentage of sales kept as profit—contracted from 10.1% to 7.3%.

3. Major wins and challenges

• The Holcim Takeover: As of March 2026, the global industry leader Holcim owns 99.99% of the company that controls Pacasmayo. Pacasmayo now operates as a subsidiary of this global powerhouse.
• Potential Delisting: Holcim intends to remove the company from the New York Stock Exchange. For U.S. investors, this means the ability to trade these shares on the NYSE will soon end, which will likely reduce liquidity and make the shares more difficult to buy or sell.
• Reliance on "Self-Construction": Approximately 74% of their business comes from families building or renovating their own homes. This makes the company highly sensitive to the local economy; if household disposable income drops, construction activity—and Pacasmayo’s sales—tends to decline.

4. Financial health and the "Control" issue

With Holcim owning 99.99% of the company, they hold absolute authority over all major decisions. They appoint the Board of Directors, dictate capital allocation, manage debt levels, and determine dividend policies. As a minority shareholder, you have effectively no influence over these corporate actions.

5. Key risks: What could go wrong?

• Regulatory Differences: As a foreign entity, the company is not subject to the same U.S. governance requirements as domestic firms, such as mandates for a majority-independent board or specific U.S.-style financial reporting disclosures.
• Operational Concentration: Nearly 89% of their cement production is generated by just two plants. Because these facilities are located in the same region, the company is vulnerable to localized risks, such as natural disasters or labor disruptions, without significant backup capacity.
• Currency Risks: The company generates revenue in Peruvian Soles, but dividends are converted to U.S. Dollars for many international investors. If the Sol weakens against the Dollar, the value of your dividends and your overall investment may decrease.

6. The "Big Picture" Outlook

The company is currently in a significant transition. While being part of the Holcim network offers potential long-term stability, the pending delisting and the concentration of power in the hands of a single majority owner change the investment profile.

Decision Checklist:

• Are you comfortable with a long-term hold? Since the stock may soon be delisted from the NYSE, this is no longer a typical "buy and sell" investment.
• Do you understand the risks of minority ownership? You are essentially a passenger in a company fully controlled by Holcim.
• Is your portfolio prepared for regional economic shifts? Because the company relies heavily on individual home-building in Northern Peru, your investment will rise and fall with the local economy rather than global construction trends.