Cementos Pacasmayo (CPAC) Q3 2026 earnings review
Pacasmayo profit jumps 70%, while major concrete projects wind down
Cementos Pacasmayo, the leading cement producer in northern Peru, sold much more bagged cement while cutting its factory energy bill. Third-quarter revenue rose 16% from a year ago, and net income jumped 70% to S/ 121 million as operating margin widened by 8 percentage points. The company gave no formal financial outlook in its release.
| Revenue | S/ 667.4M +16.3% from a year ago |
|---|---|
| Cement, concrete and precast shipments | 929.8k MT +14.2% from a year ago |
| Operating margin | 29.1% +8.0 percentage points from a year ago |
| Net income | S/ 121.4M +69.8% from a year ago |
⚖️ Verdict: 🟢 Bullish
The story got better because profitability improved across every division at the same time. A new electricity contract lowered cement production costs, last year's union bonus did not repeat in administrative expenses, and finishing the troubled Piura airport job lifted the concrete division from gross losses to a 20% gross margin. One caution: the end of the Yanacocha, Motupe and Piura airport contracts caused ready-mix concrete revenue to drop 20%.
The question now is whether everyday homebuilders and small municipal works can keep total volumes growing at a double-digit pace without new flagship infrastructure projects. If small works stay strong and the new power contract holds, operating margins can stay near 29%; if bagged demand slows while the Piura clinker kiln is already at 100% capacity, profit growth will cool. Fourth-quarter shipment volumes and concrete sales will show which trend wins.
🐂 Bull Case
Cheaper Power and Lower Bonus Costs Lifted Margins
Cementos Pacasmayo, the main cement maker in northern Peru, expanded its operating margin by 8.0 percentage points from a year ago to 29.1%. Both factory expenses and office overhead shrank as a share of sales, which allowed operating profit to rise 60.1% to S/ 194.2 million.
- Cost of making the products: 55.1% of revenue, down 5.9 percentage points from a year ago by our math
- Administrative overhead: 10.7% of revenue, down 2.7 percentage points by our math
- Cement gross margin: 50.0%, up 2.0 percentage points
Two changes drove the savings. Cement production costs fell "as a new energy contract lowered our average cost" and because the kilns used a lower share of clinker, the intermediate material heated in kilns to make cement. Meanwhile, administrative expenses dropped 6.9% "primarily reflecting a lower collective bargaining bonus than in 2025", when the Peruvian producer paid a larger upfront sum for its three-year union agreement.
What to watch: fourth-quarter cement gross margin. Clinker production in the first nine months was down 2.4% because of kiln maintenance timing, and Pacasmayo expects full-year clinker volumes to catch up by year-end. Running the kilns harder in the fourth quarter will test whether cement gross margin can stay at 50.0%.
Bagged Cement and Small Works Accelerated Shipments
Investors worried last year that Peru's 2026 general elections would slow private building and public works. Instead, Pacasmayo's shipments of cement, concrete and precast — factory-molded concrete parts like paving stones — grew 14.2% from a year ago to 929,800 metric tons, accelerating from 9.0% volume growth in the third quarter of 2025.
The volume rise came "mainly due to an increase in bulk for minor infrastructure works, as well as bagged cement demand". In Peru, individuals buy bagged cement a few bags at a time to build or expand their own homes, a market known as self-construction. Combined with higher average prices, pure cement sales rose 21.3% to S/ 571.6 million, making up 88.2% of core product revenue.
What to watch: fourth-quarter shipment volumes against last year's 832,800 metric tons. Continued double-digit growth would show that small public works and homebuilders are carrying demand without relying on flagship infrastructure contracts.
Ending the Piura Airport Job Fixed Concrete Margins
For the past year, cost overruns on the Piura airport contract pushed Pacasmayo's ready-mix concrete, pavement and mortar division into gross losses, including a negative 1.2% gross margin a year ago and negative 3.5% for full-year 2025. This quarter, the division's gross margin jumped 21.0 percentage points to 19.8%, generating S/ 13.0 million in gross profit.
Management said the turnaround came "due to a commercial strategy focused on value creation and profitability" alongside cost savings after finishing the Piura airport deliveries. Precast products also expanded their gross margin by 5.1 percentage points to 16.1% as sales rose 23.1% on demand for concrete pavers in Piura, Trujillo and Chiclayo.
What to watch: concrete, pavement and mortar gross margin in the fourth quarter. Holding a double-digit margin for a second quarter after the airport completion would confirm that the division's pricing discipline is permanent.
🐻 Bear Case
Large Infrastructure Contracts Ended With Few Replacements
Pacasmayo highlighted its engineering products in the release, pointing to underground concrete pipes and an extra 4.4 kilometers of concrete sheet piles — prefabricated walls that prevent riverbanks from eroding — specified for the Piura River defense project. Yet actual sales in the concrete, pavement and mortar segment fell 19.7% from a year ago to S/ 65.6 million, and are down 13.0% over the first nine months.
The drop happened "following the finalization of deliveries for the Yanacocha, Motupe, and Piura airport projects". While smaller river defense and paver orders helped margins, they were too small to replace the revenue from those three major projects. At the same time, selling and distribution expenses rose 9.8% to S/ 27.0 million, driven by a 24.8% jump in sales staff pay, as the group spent more to defend its market share.
What to watch: concrete, pavement and mortar revenue in the fourth quarter. Last year the segment already dropped to S/ 60.3 million in the fourth quarter, so another decline against that lower base would show the large-project pipeline remains thin.
Piura Clinker Kiln Hit Full Capacity
Pacasmayo operates three plants in northern Peru: Pacasmayo, Piura and Rioja. This quarter, the company shifted cement production toward Piura, where output jumped 49.1% from a year ago to 353,700 metric tons, while the flagship Pacasmayo plant's output dipped 0.9% "primarily reflecting a strategic redistribution of production to serve the market from the Piura plant instead of Pacasmayo".
That shift, combined with "scheduled kiln maintenance under our annual production plan—which took place in 2Q26 this year versus 3Q25 last year", pushed Piura's clinker utilization rate up 25.7 percentage points to 100.0%. Rioja's clinker utilization also reached 91.9%, bringing total company clinker utilization to 92.5%. Running kilns at full capacity leaves little room in Piura for unexpected maintenance or further local volume spikes without shipping clinker from Pacasmayo.
What to watch: Piura's clinker utilization rate and cement gross margin in the fourth quarter. If Piura cannot make enough clinker locally to meet northern demand, shipping more material between plants could raise transport costs.
👓 Other Themes
Capital Spending Halved After Holcim Took Control
Swiss building materials group Holcim completed its purchase of a 50.01% controlling stake in Pacasmayo on March 30, 2026. Over the first nine months of 2026, Pacasmayo spent S/ 42.9 million on capital projects, down 53.2% from S/ 91.7 million in the same period last year by our math, mainly because spending on concrete and aggregates equipment fell from S/ 38.0 million to S/ 8.0 million.
💲 Other KPIs
Net debt — total debt of S/ 1,337.0 million minus S/ 387.7 million in cash and deposit certificates — fell 22.9% from a year ago by our math. Higher operating profit and lower capital spending built cash, cutting the ratio of net debt to EBITDA (earnings before interest, taxes, depreciation and amortization) to 2.0 times from 2.8 times at year-end.
Inventories shrank 14.9% from a year ago and 9.6% since December 2025 by our math, even as third-quarter sales grew 16.3%. The drawdown comes from using up stockpiled clinker — 9M clinker production fell 2.4% while cement output rose 13.6% — which freed up cash during the first nine months.
Short-term money owed by customers and other parties dropped 22.3% from a year ago and 13.7% since December 2025 by our math. Because bagged cement sales to hardware stores and homebuilders grew while large infrastructure concrete contracts ended, the group collected cash faster on its sales.
❓ Key Questions
Why Did management Not Provide a Forward Outlook?
Pacasmayo gave no revenue, volume or margin targets in the release, and no conference call transcript was supplied. Investors need to know whether management still expects full-year EBITDA margins near the third quarter's 34.9% or the nine-month rate of 32.9%.
What Will Pacasmayo Do With Its S/ 388M Cash Pile?
Cash reached S/ 387.7 million while S/ 571.6 million of debt comes due within one year. Management has not said whether new controlling owner Holcim will use the cash to pay down short-term debt at maturity or raise the annual dividend.
Is the 53% Cut in Capital Spending Permanent?
Nine-month capital spending dropped to S/ 42.9 million from S/ 91.7 million a year ago, well below the S/ 100 million annual maintenance level management cited last year. Did projects slip into the fourth quarter, or has Holcim reduced the ongoing spending budget?
Which Large Projects Will Replace Yanacocha and Piura Airport?
Concrete, pavement and mortar sales fell 19.7% after three major projects finished. Beyond the 4.4 kilometers of Piura River sheet piles, what contracted infrastructure projects are scheduled to start deliveries in early 2027?