Cementos Pacasmayo S.A.A. - ADR

Company Overview

Business Model: Cementos Pacasmayo S.A.A. is a Peruvian cement company with over 67 years of operating history, primarily serving the northern region of Peru. The company's core business involves the production, distribution, and sale of cement and cement-related materials, including precast products and ready-mix concrete, predominantly for the construction sector. Additionally, Cementos Pacasmayo S.A.A. produces and sells quicklime, primarily for mining operations, though it represents a small percentage of overall revenues. The company operates a vertically integrated model, from owning quarries for raw materials to managing an extensive distribution network.

Market Position: Cementos Pacasmayo S.A.A. holds a unique market position as the sole cement manufacturer serving the northern region of Peru. In 2024, the company's cement, concrete, and precast shipments totaled approximately 2.8 million metric tons, representing an estimated 22.8% share of total cement shipments in Peru. The company benefits from strong brand recognition and customer loyalty, supported by one of Peru's largest independent retail distribution networks for construction materials, known as "DINO." Its global clinker/cement ratio of 71.5% is below the global average for similar producers, indicating a focus on blended cements with a lower carbon footprint.

Recent Strategic Developments:

• Capacity Expansion & Efficiency: Completed a US$83.5 million investment in the second half of 2023 to optimize the Pacasmayo plant with a new, more efficient kiln, adding an estimated 660,000 metric tons of clinker capacity per year. This initiative significantly reduced the reliance on imported clinker and lowered emissions.
• Product Innovation: Launched "EcoSaco," a cement bag designed to disintegrate completely within concrete mixes, generating zero waste. This product received multiple sustainability awards in 2023.
• Digital Transformation: Embraced digital transformation with initiatives like "Mundo Experto," an ecosystem for construction workers and self-builders (over 68,000 users and 85,700 training hours), and "Pacas Pro" for the industrial segment (81% customer satisfaction in concrete services).
• Sustainability Certifications: Implemented Environmental Product Declarations (EPDs) for key cement products (Extraforte, Fortimax, Type I) in 2024, aligning with Peru’s Sustainable Building Code. The company also obtained ISO 37301 compliance management system certification in January 2023 and ISO27001:2022 certification for its cement production and distribution process in 2024.
• Infrastructure Projects: Participated in a consortium for the rehabilitation and improvement of the runway and installation of the perimeter fence at Piura Airport, demonstrating direct involvement in construction projects.

Geographic Footprint: Cementos Pacasmayo S.A.A.'s entire operations and customer base are located within Peru, specifically concentrated in the northern region. This market spans from the Ecuadorian border south to Barranca (approximately 180 kilometers north of Lima), extending east into the rainforest and west to the Pacific Ocean. Key provinces covered include Amazonas, Cajamarca, La Libertad, Lambayeque, Piura, San Martín, and Tumbes. The company operates three cement production facilities: Pacasmayo, Piura, and Rioja, strategically located to serve this region.

Cross-Border Operations: While all operating subsidiaries are incorporated in Peru, Cementos Pacasmayo S.A.A. has limited cross-border activities. It imports small amounts of bituminous coal, primarily from Colombia, and previously relied on imported clinker until its new kiln became operational in 2023. The company's US-incorporated subsidiary, 150Krea Inc., is not currently in operation. The company's financial performance is sensitive to global macroeconomic conditions, international energy prices, and freight costs due to its import dependencies.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 36.8%
• Operating Margin: 19.8%
• Net Margin: 10.1%

Investment in Growth:

• Capital Expenditures: US$25.7 million (S/96.9 million) in 2024.
• Strategic Investments: US$83.5 million invested in the Pacasmayo plant's clinker line optimization project (completed 2H 2023). Significant investment in the Piura Airport runway rehabilitation project as part of a consortium.

Currency Impact Analysis:

• Foreign exchange impact on revenue and earnings: Approximately 20.5% of Cementos Pacasmayo S.A.A.'s costs are denominated in U.S. dollars. The company reported a net loss from exchange difference of S/0.8 million in 2024, compared to a net gain of S/4.9 million in 2023.
• Hedging strategies and effectiveness: Cross currency swaps, previously used to manage foreign exchange risk, were fully settled in 2023.
• Functional currency considerations: The functional and presentation currency for the consolidated financial statements is the Peruvian Sol (S/).

Business Segment Analysis

Cement, concrete, mortar, pavement and precast

Financial Performance:

• Revenue: S/1,906.8 million (+3.1% YoY)
• Gross Margin: 38.2%
• Key Growth Drivers: The segment's revenue growth was primarily driven by a 13.9% increase in concrete and mortar sales and a substantial 315.2% increase in pavement sales, largely due to the Piura airport rehabilitation contract. Cement sales revenue decreased by 2.2% due to a 5.8% decrease in demand, partially offset by a 3.6% increase in average pricing. Cost efficiencies from the new kiln and lower raw material costs contributed to a 4.1 percentage point increase in cement gross margin.

Product Portfolio:

• Cement: Offers seven types, including Type ICo. Extraforte (Portland composite), Type HS (sulfate-resistant), Type HE (high-early-strength, reduced clinker), Type GU. Mochica GU (general purpose), Type MS. Mochica MS (sulfate-resistant), Type I (general purpose), and Type V (severe sulfate action).
• Concrete Products: Ready-mix concrete (19 fixed and mobile plants), Precast products (paving units, New Jersey Walls, Corner block, Beam block, Concrete pipes, Sheet piles).
• New Cement-Based Products: Mortar for brick laying, Mortar for plaster, Caravista Concrete, Tremie Concrete, Viaforte Type MH (soil stabilization), Bagged Dry Concrete.

Market Dynamics: The segment's demand is highly correlated with construction levels in northern Peru, with auto-construcción (households building/improving their own homes) accounting for approximately 74.8% of cement sales in 2024. Private construction projects contributed 15.3%, and public construction projects 9.9%. Cementos Pacasmayo S.A.A. is the sole cement manufacturer in this region.

Geographic Revenue Distribution:

• Peru (Northern Region): S/1,906.8 million (100% of segment revenue)
• Growth Markets: Focus on increasing demand through new cement-based products and supporting retailers and end-consumers in the northern region.

Quicklime

Financial Performance:

• Revenue: S/14.2 million (-44.7% YoY)
• Gross Margin: -15.5%
• Key Growth Drivers: The significant decrease in revenue and negative gross margin were mainly due to lower sales volume in 2024.

Product Portfolio: Produces and distributes quicklime in finely and coarsely ground varieties, sold in bags of one metric ton or in bulk.

Market Dynamics: Quicklime is primarily used in the Peruvian mining industry for water treatment, with additional applications in steel, food, fishing, chemical industries, and agriculture.

Geographic Revenue Distribution:

• Peru (Northern Region): S/14.2 million (100% of segment revenue)

Construction Supplies

Financial Performance:

• Revenue: S/56.9 million (-23.2% YoY)
• Gross Margin: 3.5%
• Key Growth Drivers: The decrease in revenue was mainly attributed to lower sales volumes of steel rebars.

Product Portfolio: Distributes construction materials manufactured by third parties, including steel rebar, wires, nails, corrugated iron, electric conductors, plastic tubes, and accessories.

Market Dynamics: These products are primarily sold as a service to retailers within the DINO distribution network to support the sale of Cementos Pacasmayo S.A.A.'s core cement products.

Geographic Revenue Distribution:

• Peru (Northern Region): S/56.9 million (100% of segment revenue)

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure:

• Subsidiaries: All of Cementos Pacasmayo S.A.A.'s operating subsidiaries are incorporated and domiciled in Peru. The company has one non-operating subsidiary, 150Krea Inc., incorporated in the United States, which is not currently in operation.
• Joint Ventures: Distribuidora Norte Pacasmayo S.R.L., a subsidiary, is a key partner in the Consorcio Constructor del Norte del Perú, established for the Piura Airport project.
• Licensing Agreements: No material international licensing agreements are explicitly disclosed.

Cross-Border Trade:

• Export Markets: The filing does not explicitly mention primary export destinations or products.
• Import Dependencies: Cementos Pacasmayo S.A.A. imports small amounts of bituminous coal, primarily from suppliers in Colombia. Until the second half of 2023, the company also used imported clinker to meet demand.
• Transfer Pricing: The company is subject to Peruvian transfer pricing rules and formal obligations to comply with BEPS (Base Erosion and Profit Shifting) Guidelines for transactions with related parties or entities in low/no-tax jurisdictions.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not disclosed.
• Dividend Payments: S/175.5 million in 2024 and S/175.5 million in 2023.
• Future Capital Return Commitments: The Board of Directors has been delegated authority by shareholders to determine the distribution of dividends from retained earnings and 2024 operating results.

Balance Sheet Position:

• Cash and Equivalents: S/72.7 million (US$19.3 million) as of December 31, 2024.
• Total Debt: S/1,493.2 million (US$396.7 million) as of December 31, 2024.
• Net Cash Position: S/(1,420.5) million (Net Debt) as of December 31, 2024.
• Debt Maturity Profile: Short-term promissory notes totaling S/303.2 million mature in 2025. Senior Notes of S/259.7 million mature in February 2029, and S/309.5 million mature in February 2034. A "Club Deal" corporate loan of S/620.7 million matures in December 2028.

Cash Flow Generation:

• Operating Cash Flow: S/321.1 million (US$85.3 million) in 2024, a decrease of 22.1% from S/412.3 million in 2023, primarily due to less use of inventory stock and an increase in accounts receivable related to a consortium.
• Free Cash Flow: Not explicitly disclosed.

Currency Management:

• Cash holdings by major currencies: As of December 31, 2024, US$6.69 million of cash and cash equivalents were held in U.S. dollars.
• Natural hedging through operational diversification: Not explicitly detailed.
• Financial hedging instruments and strategies: Cross currency swaps, previously used for hedging, were fully settled in 2023.

Operational Excellence

Production & Service Model: Cementos Pacasmayo S.A.A. employs a vertically integrated production and service model, encompassing the entire value chain from raw material extraction to product distribution. The company focuses on operational efficiency, cost reduction, and innovation to meet market demand. Its production process involves extraction, grinding, homogenization, clinkerization, cement grinding, storage, and packaging. Quicklime is produced by calcining limestone in a rotary kiln.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Limestone/Coquina: Sourced from company-owned quarries (Acumulación Tembladera, Calizas Tioyacu, Virrilá) located near production facilities.
• Clay/Sand: Extracted from company-owned quarries (Cerro Pintura, Pajonal).
• Iron, Gypsum, Blast Furnace Slag: Purchased from third-party suppliers at market prices.
• Coal: Primarily anthracite coal from local Peruvian suppliers, with small amounts of bituminous coal imported from Colombia.
• Electricity: Supplied by Electroperú S.A. for Pacasmayo and Piura facilities (contract until 2026) and Electro Oriente S.A. for the Rioja facility (contract until December 2025).
• Transportation: Finished products are transported by third-party truck operators.

Facility Network:

• Manufacturing:
  • Pacasmayo facility: 2.9 million metric tons/year cement capacity, 1.76 million metric tons/year clinker capacity (including a new 660,000 metric tons/year horizontal kiln added in 2023), and 240,000 metric tons/year quicklime capacity.
  • Piura facility: 1.6 million metric tons/year cement capacity, 990,000 metric tons/year clinker capacity.
  • Rioja facility: 440,000 metric tons/year cement capacity, 289,080 metric tons/year clinker capacity.
  • Total installed annual cement production capacity: 4.9 million metric tons.
  • Total installed annual clinker production capacity: 3.035 million metric tons.
• Research & Development: A new research and development laboratory was opened in 2024 to optimize cement performance and applications.
• Distribution: Operates 22 fixed and mobile ready-mix concrete and precast facilities across northern Peruvian cities (e.g., Chimbote, Trujillo, Chiclayo, Piura). Maintains a warehouse at the Salaverry port facility.

Operational Metrics:

• Cement Production (2024): 2.832 million metric tons.
• Clinker Production (2024): 2.123 million metric tons.
• Quicklime Production (2024): 18 thousand metric tons.
• Overall Cement Utilization Rate (2024): 57.3%.
• Overall Clinker Utilization Rate (2024): 70.0%.
• Cost of electricity: Represented 14.3% of cement production costs in 2024.
• Cost of coal: Represented 17.0% of cement production costs in 2024.
• Cost of third-party admixtures and raw materials: Represented 2.7% of cement production costs in 2024.
• Cost of imported clinker: Represented 4.8% of cement production costs in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Engages directly with small, medium, and large private construction companies, as well as national, regional, and local government entities for construction projects.
• Channel Partners: Leverages a large independent retail distribution network, "DINO," comprising 289 independent retailers and 315 hardware stores, primarily small local stores in northern Peru. This network also distributes third-party construction materials.
• Digital Platforms: Utilizes "Mundo Experto" as a virtual ecosystem for self-builders and construction foremen, offering training and improving the purchasing experience. "Pacas Pro" serves the industrial segment with tech-driven solutions.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Engages with major enterprise relationships for large construction sites, including housing complexes, commercial developments, and public infrastructure projects (e.g., Piura Airport runway rehabilitation).
• Strategic Partnerships: Fosters strong ties with distributors through product education, training, rewards programs, and financing assistance.
• Customer Concentration: As of December 31, 2024, 8 customers accounted for approximately 34% of total trade receivables, and 22 customers accounted for approximately 23% of total trade receivables.

Regional Market Penetration: Cementos Pacasmayo S.A.A. maintains a leading position as the sole cement manufacturer in the northern region of Peru, serving a highly fragmented consumer base. Auto-construcción (self-construction) is a primary driver, accounting for approximately 74.8% of cement sales in 2024.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The Peruvian cement market is competitive and segmented into three main geographic regions: northern, central, and southern. Cementos Pacasmayo S.A.A. is the sole manufacturer in the northern region. The market is characterized by a highly fragmented consumer base, relatively low energy and raw material costs, and a strong correlation with auto-construcción and public/private investments.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• UNACEM: Primarily serves the central region of Peru, including the Lima metropolitan area.
• Cementos Yura: Primarily serves the southern region of Peru.
• Caliza Cemento Inca: Serves the central region and other parts of the country.
• Mixercon S.A.: Located in Lima, primarily serves the city, and was acquired by Holcim Ltd. in August 2024.
• Holcim Ltd.: A Swiss-based company that entered the Peruvian construction market in 2024 through the acquisition of Compañía Minera Agregados Calcareos S.A. (Comacsa), Mixercon S.A., and Compañía Minera Luren.
• Imports: Accounted for approximately 1.7% of cement consumed in the central region in 2024.

Regional Competitive Dynamics: Competition could intensify if other Peruvian cement manufacturers expand their distribution to the northern region, develop new plants in the north, or if foreign manufacturers increase imports, particularly if global production capacity exceeds demand and transportation costs decrease.

Risk Assessment Framework

Strategic & Market Risks

• Global Market Dynamics: Operations are highly dependent on the Peruvian economy, which is significantly affected by global factors such as the Russia-Ukraine war, the Israel-Hamas war, escalating trade tensions (e.g., between the United States and China, Mexico, Canada), rising inflation, and increased global freight costs. These factors can reduce demand for Peruvian exports, affecting disposable income and, consequently, demand for construction materials.
• Technology Disruption: Risks associated with failing to keep pace with rapidly evolving artificial intelligence (AI) and machine learning (ML) technologies, as well as potential business, compliance, and reputational risks from unintended consequences or improper utilization of AI.
• Customer Concentration: While not explicitly identified as a strategic risk, the company's reliance on the auto-construcción segment (74.8% of cement sales in 2024) and a concentrated group of large customers (34% of trade receivables from 8 customers) could pose risks if economic conditions or customer relationships deteriorate.

Operational & Execution Risks

• Global Supply Chain Vulnerabilities: Exposure to increases in energy prices (electricity and coal, representing 14.3% and 17.0% of cement production costs in 2024, respectively) and potential shortages. Dependence on third-party suppliers for admixtures and raw materials (2.7% of production costs in 2024) and imported clinker (4.8% of production costs in 2024).
• Regional Disruptions: High concentration of operations in northern Peru makes the company vulnerable to adverse economic, political, or social conditions, as well as natural disasters like earthquakes, floods (e.g., El Niño, Cyclone Yaku), and government-mandated plant closures (e.g., public health crises).
• Trade Restrictions: Potential for new tariffs on Peruvian exports could reduce customer income and demand for products.

Financial & Regulatory Risks

• Currency & Financial Risks: Significant exposure to currency mismatch risks as revenues are in Soles while 20.5% of costs are in U.S. dollars. Depreciation or devaluation of the Sol increases U.S. dollar-denominated debt service obligations and costs. All borrowings are at fixed interest rates, mitigating interest rate risk.
• Regulatory & Compliance Risks: Subject to extensive Peruvian regulations across tax, environmental, labor, health and safety, and mining matters. Changes in tax laws (e.g., transfer pricing, mining royalties, VAT exemptions) or their interpretation, stricter environmental regulations, and new labor laws (e.g., cement bag weight regulations) could increase costs and compliance burdens.
• Credit & Liquidity: Credit risk from trade receivables and bank deposits. Liquidity is managed through a recurring planning tool, with access to bank loans and long-term debentures. Financial covenants on debt instruments (e.g., debt-to-EBITDA ratio, debt service coverage ratio) must be maintained.

Geopolitical & External Risks

• Country-Specific Risks: Political, social, and economic instability in Peru, including corruption scandals, social disturbances (riots, protests, strikes, illegal mining), and high levels of poverty, could adversely affect the Peruvian economy and the company's operations.
• Economic Risk: Peru's economy is highly susceptible to fluctuations in regional and global markets due to its dependence on commodity exports, which can impact government finances, investor confidence, and consumer spending.
• Regulatory Changes: International agreements related to climate change (e.g., Kyoto Protocol, Framework Law on Climate Change) may lead to stricter domestic regulations, potentially increasing costs for emissions controls or carbon credits.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network: Cementos Pacasmayo S.A.A. places significant emphasis on research and development, evidenced by the opening of a new R&D laboratory in 2024. This laboratory is designed to optimize cement performance across various applications. Innovation Pipeline: The company has a strong innovation pipeline focused on product differentiation and operational efficiency. Key developments include:

• Specialized Cements: Sulfate-resistant cements for coastal construction and HE (High Early-Strength) cement with an 8% reduction in clinker content, targeting the handcrafted precast segment and broader business units.
• Sustainable Products: The award-winning "EcoSaco," a cement bag that fully disintegrates within concrete, generating zero waste.
• Digital Solutions: Development of "Mundo Experto" for mass channel and self-builders, and "Pacas Pro" for industrial clients, enhancing customer experience and promoting digitalization in the construction sector. Intellectual Property Portfolio: The filing mentions a patent strategy and IP litigation as a general risk, but does not provide specific details on patent holdings by jurisdiction or cross-border licensing programs. Technology Partnerships: Cementos Pacasmayo S.A.A. is a member of Innovandi Global Cement and Concrete Research Network, the innovation arm of the Global Cement and Concrete Association (GCCA), which focuses on developing innovations for industry decarbonization and achieving carbon-neutral concrete by 2050.

Leadership & Governance

Executive Leadership Team

International Management Structure: Cementos Pacasmayo S.A.A. operates primarily within Peru, and its management structure reflects this domestic focus. Regional leadership and reporting relationships are not explicitly detailed for international operations beyond the general executive team.

Board Composition: The Board of Directors comprises seven members with an average tenure of 10.71 years. It includes three independent directors: Ana María Botella Serrano, Esteban Chong León (who also serves as the financial expert and chairman of the audit committee), and Venkat Krishnamurthy. The board oversees the company's business and affairs, with specific committees for Executive, Antitrust Best Practices, Audit, Good Corporate Governance, and Sustainability.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments: Cementos Pacasmayo S.A.A. operates exclusively in Peru and is subject to a comprehensive domestic regulatory framework:

• Mining Regulations: Governed by the General Mining Law, requiring concessions for mineral extraction, annual concession fees (US$3.00 per hectare), and compliance with minimum annual production levels. Mining royalty tax is payable quarterly based on operating profit margin or 1% of net sales.
• Industrial Regulations: Subject to the General Industry Law, promoting and regulating manufacturing activities, environmental protection, and product quality.
• Environmental Regulations: Compliance with various environmental protection and health and safety laws, including the National Environmental Impact Assessment System, Environmental Management Regulations for the Manufacturing Industry, air emission and wastewater discharge standards, and the Law on Integrated Solid Waste Management. The Framework Law on Climate Change (2018) and Supreme Decree No. 003-2022-MINAM (2022) declare a climate emergency and establish guidelines for climate change adaptation and mitigation.
• Technical Regulations: Adherence to the Technical Regulation on Hydraulic Cement Used in Buildings and Constructions in General (effective July 2023), which sets minimum safety requirements and product characteristics.
• Prior Consultation Rights: Subject to Law No. 29785 regarding the Prior Consultation Right of Local Indigenous Communities for new legislative or administrative measures affecting their rights.
• Labor Regulations: Compliance with Peruvian labor laws regarding employment contracts, minimum wage, working hours, overtime, vacation, life insurance, compensation for years of service, and profit-sharing (8-10% of taxable income).
• Competition Law: Subject to anti-competitive behavior sanctions under the Free and Fair Competition Protection laws, including abuse of dominant market position and concerted practices. Business concentration operations require prior control.

Cross-Border Compliance:

• Export Controls: Not explicitly detailed in the filing.
• Sanctions Compliance: Not explicitly detailed in the filing.
• Anti-Corruption: Implemented and certified under ISO 37001 anti-bribery management systems since 2019, demonstrating commitment to global anti-bribery best practices.

International Tax Strategy:

• Transfer Pricing: Subject to Peruvian transfer pricing rules and formal obligations to comply with BEPS (Base Erosion and Profit Shifting) Guidelines for transactions with related parties or entities in low/no-tax jurisdictions.
• Tax Treaties: Not explicitly detailed in the filing.
• BEPS Compliance: The Peruvian government has introduced changes to tax laws to comply with BEPS Guidelines, requiring documentation and adjustments to taxable bases.

Environmental & Social Impact

Global Sustainability Strategy: Cementos Pacasmayo S.A.A. is deeply committed to high environmental, social, and corporate governance (ESG) standards. The company is a member of the Global Cement and Concrete Association (GCCA) and its innovation arm, Innovandi Global Cement and Concrete Research Network, committing to producing carbon-neutral concrete by 2050. It has been included in the Dow Jones Sustainability MILA Pacific Alliance Index for six consecutive years and The Sustainability Yearbook for five consecutive years, and participates in the Carbon Disclosure Project (CDP).

Environmental Commitments:

• Climate Strategy: Aims to reduce emissions by 20% and achieve over 20% co-processing by 2030. The new kiln at the Pacasmayo plant contributes to lower emissions and energy efficiency.
• Carbon Neutrality: Committed to achieving carbon-neutral concrete production by 2050, aligning with global climate targets.
• Renewable Energy: Not explicitly detailed.
• Regional Sustainability Initiatives: Complies with Peruvian environmental protection standards, including Environmental Impact Studies (EIS) and Environmental Adaptation and Management Programs (EAMP) for its mining concessions. The company maintains a quarry rehabilitation provision for future costs.

Social Impact by Region:

• Community Investment: Actively engages in social responsibility initiatives in communities surrounding its plants, focusing on education, health, and local development. Programs include:
  • Tecsup: Provides scholarships to local students for technical education.
  • Center for Technological Training: Offers business and technical skills training, benefiting over 2,601 stakeholders in 2024.
  • Abilities Strengthening: Provides training and seminars to local stakeholders, benefiting 151 in 2024.
  • Universidad de Ingeniería y Tecnología (UTEC): Provides financial aid to support engineering education.
  • Floor Improvement Project: Contributed 21,250 bags of cement to help 1,008 families build concrete floors in their homes in 2024.
• Labor Standards: As of December 31, 2024, approximately 19.7% of employees were union members. The company reports positive labor relations, with no material strikes or work stoppages in the past, and achieved an employee Engagement Index of 87.70% in 2024.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure:

Hedging Strategies:

• Transaction Hedging: The company previously utilized derivative financial instruments (cross currency swaps) to manage foreign exchange risk, which were fully settled in 2023.
• Translation Hedging: Not explicitly detailed.
• Economic Hedging: Not explicitly detailed.
• Financial hedging instruments and strategies: The company's current strategy relies on its fixed-rate debt structure and natural hedging from its Soles-denominated revenue base. Sensitivity analysis indicates that a 5% depreciation of the U.S. dollar rate would result in a S/0.593 million positive effect on consolidated profit before tax, while a 5% appreciation would result in a S/0.593 million negative effect.