Breaking Down Cementos Pacasmayo S.A.A. (CPAC) Financial Health: Key Insights for Investors

You're looking for a clear signal in the construction materials sector, and frankly, Cementos Pacasmayo S.A.A. (CPAC) just delivered a strong one with their Q3 2025 results. The company isn't just surviving; it's thriving on the back of regional infrastructure demand, a trend we defintely see continuing. They posted a 10.9% year-over-year jump in revenue, hitting S/ 574.1 million (about $153 million at current exchange rates), which shows real operational momentum. This strong top-line growth translated to a net income of S/ 71.5 million, a solid 14.4% increase, proving they can manage costs even with higher volume. But the real story for a seasoned investor is the balance sheet: their Net Debt-to-EBITDA ratio sits comfortably at 2.5x, a healthy sign of deleveraging that gives them flexibility for future capital expenditures (CapEx). That's a company that's earning its growth, not just borrowing it.

Revenue Analysis

You need to know where the money is coming from to truly understand Cementos Pacasmayo S.A.A. (CPAC), and the story for the 2025 fiscal year is one of solid, infrastructure-driven growth. The company is not just a single-product operation; it's a diversified building materials supplier, but cement is defintely the core.

For the first nine months (9M) of 2025, CPAC reported total sales of PEN 1,557.34 million (Peruvian Soles), marking a 7.3% increase over the same period in 2024. If you look at the trailing twelve months (TTM) ending September 30, 2025, that total revenue figure hits approximately $614.75 million (USD). That's a strong number, and it shows the Peruvian construction sector is still moving.

Here's the quick math on where that revenue is generated:

• Cement: This is the flagship product, sold primarily as bagged cement to the self-construction segment, which is a huge market in Peru.
• Concrete and Precast: This segment includes ready-mix concrete and precast materials, which are critical for large-scale infrastructure projects.
• Quicklime: A smaller but important stream, this is sold mainly to the mining industry for use in their operations.

The key takeaway is that the growth isn't uniform. The overall revenue increase is being fueled by a surge in demand for both bagged cement and, more significantly, sales tied to major infrastructure projects. For instance, the sales volume for cement, concrete, and precast materials rose by 9.0% in the third quarter of 2025 alone.

The biggest change in the revenue mix is the acceleration in the non-cement segments. While cement remains the primary source, the Concrete, Pavement, and Mortar segment saw its sales increase by a robust 19.5% for the first nine months of 2025, largely thanks to those infrastructure contracts. That's a significant shift, showing the company's successful push to diversify its revenue base beyond just bagged cement for the retail consumer. You can find a deeper dive into the company's financial structure in Breaking Down Cementos Pacasmayo S.A.A. (CPAC) Financial Health: Key Insights for Investors.

This is how the growth rates stack up for the major product lines, showing where the near-term opportunity lies:

What this estimate hides is the potential volatility in the infrastructure segment, which is often tied to government spending and political stability. Still, the current momentum is strong, driven by a dual engine of steady self-construction demand and large-project wins.

Profitability Metrics

You need to know if Cementos Pacasmayo S.A.A. (CPAC) is turning its strong revenue growth into real profit, and the short answer is yes, but with a few operational caveats. The company's Trailing Twelve Months (TTM) profitability ratios, which reflect the most recent full-year cycle, show solid performance, especially when compared to a challenging industry backdrop.

For the period closest to the end of the 2025 fiscal year, Cementos Pacasmayo S.A.A. posted a TTM Gross Profit Margin of 37.63%, an Operating Profit (EBIT) Margin of 19.50%, and a Net Income Margin of 10.66%. This tells you that for every dollar of sales, the company keeps nearly 38 cents after the direct costs of production, and over 10 cents makes it all the way to the bottom line (net profit). That's a defintely healthy conversion rate.

Operational Efficiency and Margin Trends

The trend shows Cementos Pacasmayo S.A.A. is actively managing its cost of goods sold (COGS), but its operating expenses are a rising concern. In the first nine months of 2025 (9M25), Net Income jumped by 15.6% year-over-year, largely due to higher operating income and reduced interest payments from debt amortization. This is a clear indicator of improving financial efficiency.

Here's the quick math on the most recent quarter, Q3 2025: Revenues hit S/574.1 million, and Net Income was S/71.5 million, translating to a strong 12.45% Net Income Margin for the quarter. The gross margin also increased by 1.3 percentage points for 9M25 compared to the prior year, driven by:

• Lower raw material, coal, and energy costs.
• Operational efficiencies from maintenance and production plans.

But here's the limit of that good news: operating expenses are climbing. Administrative expenses rose 18.7% and selling expenses rose 24% year-to-date (YTD) through Q3 2025. This was mainly due to a triennial union bonus and higher marketing spend, which is why the Q3 2025 EBITDA margin (earnings before interest, taxes, depreciation, and amortization), a key measure of operational profitability, saw a slight 1.9 percentage point decrease to 28.0%.

Industry Comparison: Outperforming the Peers

Cementos Pacasmayo S.A.A.'s profitability ratios look favorable against the broader industry, which is still facing headwinds from overcapacity and fierce competition. While the global cement industry's sales profit margin was forecasted to be at a low level of around 4% in 2024, Cementos Pacasmayo S.A.A.'s TTM Net Income Margin of 10.66% is significantly higher. This shows a distinct competitive advantage, likely due to its dominant regional position in Peru.

To be fair, some international cement giants show higher margins, but Cementos Pacasmayo S.A.A. is still in a solid position. For example, while some of its peers in the Middle East and Asia show TTM Net Margins around 14% to over 30%, Cementos Pacasmayo S.A.A.'s 10.66% is well above the low single-digit margins seen in other parts of the global market. This is a business with pricing power and cost control that works.

This structural advantage is a major reason why you might consider Cementos Pacasmayo S.A.A. for your portfolio. To get the full picture on the company's financial stability, you should read our full analysis at Breaking Down Cementos Pacasmayo S.A.A. (CPAC) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You want to know if Cementos Pacasmayo S.A.A. (CPAC) is using too much debt to fuel its growth. The quick answer is that while their leverage is higher than some peers in the building materials sector, the company is actively deleveraging and their debt-to-EBITDA ratio shows a manageable risk profile as of late 2025.

As of the most recent quarter (MRQ) in 2025, Cementos Pacasmayo S.A.A. reported total debt of approximately $411.90 million. The company's financial strategy leans on a mix of long-term and short-term debt, but the balance sheet shows a clear focus on managing that liability. For instance, the Long-Term Debt to Equity ratio is around 66.33%, indicating that a significant portion of its total debt is long-term, which is typical for a capital-intensive business like cement production.

The most telling figure is the Total Debt to Equity (D/E) ratio, a key measure of financial leverage (how much of the company's operations are funded by debt versus shareholder equity). For Cementos Pacasmayo S.A.A., this ratio stood at approximately 103.24%, or 1.03. Here's the quick math: for every dollar of equity, the company has about $1.03 in total debt. This is a crucial metric for you to track.

• Cementos Pacasmayo S.A.A. D/E Ratio (MRQ 2025): 1.03
• Industry Benchmark (Construction/Building Materials): 0.53 to 1.5

To be fair, a D/E of 1.03 is right in the middle of the healthy range of 0.5 to 1.5 for construction-related companies, but it is higher than the general US Building Materials industry average of 0.53. Still, the company is not overextended. They are managing their debt well, as evidenced by their net debt-to-EBITDA ratio, which was 2.5x in Q3 2025. A ratio below 3.0x is generally considered healthy for the sector, so this is a solid position.

The company's recent actions reflect a commitment to deleveraging (reducing debt relative to earnings). In the Q3 2025 earnings call, management highlighted that net income increased due to lower interest payments, which stemmed from ongoing debt amortization. This means they are paying down existing loans and not just rolling them over. This focus on debt reduction is balanced with a steady capital allocation plan, including maintaining a consistent dividend and CapEx (capital expenditures) around S/100 million (approximately $30 million). This shows a pragmatic approach: they are funding growth and shareholder returns primarily through cash flow, while actively chipping away at their debt load.

You can see this balancing act in the table below, which shows the key leverage metrics for the most recent reporting period:

The key takeaway is that Cementos Pacasmayo S.A.A. is using a reasonable amount of debt to finance its operations, and its current trajectory shows a clear, actionable plan to improve its credit profile through debt amortization. If you want to dive deeper into who is buying the stock while this deleveraging is happening, you can check out Exploring Cementos Pacasmayo S.A.A. (CPAC) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Cementos Pacasmayo S.A.A. (CPAC) can meet its short-term obligations, and the 2025 numbers show a mixed, but largely manageable, liquidity picture. The key takeaway is that CPAC has enough current assets to cover its current liabilities, but a significant portion of those assets is tied up in inventory, which is typical for a cement company.

As of September 2025, the company's Current Ratio (current assets divided by current liabilities) stood at 1.40. This means CPAC has $1.40 in liquid or near-liquid assets for every dollar of short-term debt. That's defintely a healthy sign. However, the Quick Ratio (or acid-test ratio), which strips out inventory-the least liquid current asset for a cement producer-is much lower, at just 0.41.

Here's the quick math on what that gap tells us about their working capital:

• The 1.40 Current Ratio shows solid overall short-term financial strength.
• The drop to 0.41 in the Quick Ratio highlights the heavy reliance on inventory, which is standard in the building materials industry, but still a risk if demand suddenly drops.
• The working capital trend is currently being impacted by higher operating expenses, including a significant increase in administrative and selling expenses due to a union bonus negotiated in the first year of a multi-year agreement. This front-loaded personnel cost puts temporary pressure on cash conversion.

Looking at the cash flow statement for the Trailing Twelve Months (TTM) leading up to late 2025, the trends are positive for operational health and debt management. Cash flow from operations (CFO) was a strong inflow of $111.82 million. This is the lifeblood of the business; it shows they are generating substantial cash from core activities.

The other two cash flow areas also show a clear strategy:

The cash from investing (CFI) is a net outflow of $23.14 million, which is expected as CPAC continues to invest in its operational capacity. More importantly, the financing cash flow (CFF) is trending toward a net outflow as the company has been actively decreasing its debt levels, which reduces future interest payments and strengthens the balance sheet long-term. This debt reduction is a clear strength, mitigating long-term solvency risk even if short-term liquidity is inventory-heavy.

The only potential near-term liquidity concern is the low Quick Ratio, but as long as the infrastructure and self-construction demand remains solid-which drove a 9.0% increase in sales volume in 3Q25-the inventory will convert to cash efficiently. You can dive deeper into the business model and strategic landscape in our full post: Breaking Down Cementos Pacasmayo S.A.A. (CPAC) Financial Health: Key Insights for Investors. Your next step should be to monitor the Q4 2025 inventory turnover rate to confirm that conversion efficiency holds up.

Valuation Analysis

You're looking for a clear signal on Cementos Pacasmayo S.A.A. (CPAC) right now. The short answer is that the market is pricing CPAC as a mature, dividend-paying company with solid profitability, but not one poised for explosive growth. Its current valuation ratios suggest it is trading near its fair value, leaning slightly toward being fully priced based on historical norms and analyst caution.

As of November 2025, the stock is trading around the 52-week high, which is a key point to consider. The last 12 months have seen a significant price appreciation, with the stock moving from a 52-week low of $5.10 to a high of $7.57 on November 3, 2025, before settling near $7.24 to $7.37 recently. That's a strong upward trend, but it means the easy money has already been made.

Here's the quick math on the key valuation multiples:

• Price-to-Earnings (P/E) Ratio: At a trailing P/E of approximately 10.33, Cementos Pacasmayo S.A.A. is priced reasonably for a stable industrial player. This is a significant discount to the broader S&P 500, which suggests a lower growth expectation or higher risk profile for the Peruvian market.
• Price-to-Book (P/B) Ratio: The P/B ratio is around 1.60. This means the market is valuing the company at 1.6 times its net asset value, which is a healthy premium indicating that its assets are generating good returns and the company has a strong Mission Statement, Vision, & Core Values of Cementos Pacasmayo S.A.A. (CPAC).
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio, which translates jargon on first use as Enterprise Value (market capitalization plus debt, minus cash) to Earnings Before Interest, Taxes, Depreciation, and Amortization, is forecasted at approximately 5.91x for the 2025 fiscal year. This is a very attractive multiple for a company in the construction materials sector, suggesting the company is relatively cheap on an operating cash flow basis.

What this estimate hides is the inherent volatility of infrastructure spending in emerging markets, but the low EV/EBITDA is defintely a point of strength.

The dividend story is a major draw for investors seeking income. The trailing dividend yield is compelling at about 7.55%, with a forward yield estimated at 8.28%. The company recently declared a special dividend of $0.6018 per share, payable in December 2025, underscoring its commitment to returning capital to shareholders. The dividend payout ratio is high, sitting at about 78.57%, which suggests most of the earnings are being distributed, limiting capital for major internal expansion, but rewarding current owners.

Analyst consensus is mixed, which is often the case when a stock is near its 52-week high. The average rating leans toward a Reduce, with a consensus price target of $6.95. However, some analysts, like JPMorgan, have a slightly higher target of $7.50 but maintain an Underweight (or 'sell') stance, indicating they see limited upside from the current price. This caution suggests that while the fundamentals are solid, the recent price run-up has captured most of the near-term value.

Here is a summary of the key valuation metrics as of late 2025:

The core takeaway is that Cementos Pacasmayo S.A.A. is not obviously overvalued, but it's not a screaming bargain either. The low EV/EBITDA is a great sign, but the cautious analyst consensus and high payout ratio mean you should expect steady income and moderate capital appreciation, not a massive multiple expansion.

Risk Factors

You're seeing strong top-line growth from Cementos Pacasmayo S.A.A. (CPAC) in 2025, but a seasoned investor knows to look past the revenue and focus on the risk factors that could erode profitability. The company is performing well, yet two clear near-term risks-one operational and one external-demand your attention right now.

The good news is the company is actively deleveraging. The net debt-to-EBITDA ratio stood at a manageable 2.5x in the third quarter of 2025, down from 2.6x in the second quarter, which helps mitigate financial risk. Still, you need to watch their cost structure closely.

Operational Headwinds: The Cost of Doing Business

The most immediate risk is an internal one: rising operating expenses (OpEx). While CPAC's revenue increased by 10.9% in Q3 2025, their administrative and selling expenses grew even faster, which is a red flag for margin pressure. Here's the quick math on the expense surge:

• Administrative expenses jumped 20.2% in Q3 2025 year-over-year.
• Selling expenses climbed 25.5% in Q3 2025 year-over-year.

This spike is primarily due to a union bonus, which is negotiated every three years and had a larger impact in the first year of the new agreement, plus higher marketing and personnel costs. This is why the consolidated EBITDA margin for Q3 2025 actually saw a 1.9 percentage point decrease, settling at 28.0%, despite the revenue growth. It's a short-term hit, but it shows how quickly a negotiated labor cost can eat into your profitability.

Also, the high-volume Concrete, Pavement, and Mortar segment saw gross margin compression in the first half of 2025. This was due to the execution of large, complex projects like the Piura Airport, which caused a 6.5 percentage point gross margin decrease in Q1 2025 for that segment. Big contracts can be a double-edged sword; they secure volume but can be margin-dilutive.

External & Market Uncertainty

As a company operating solely in Peru, Cementos Pacasmayo S.A.A. is exposed to the country's political and economic volatility. The primary external risk is uncertainty surrounding regional political changes and economic policies, especially concerning public investment and spending, which are often volatile around electoral cycles.

However, the CEO is a trend-aware realist on this. They noted that even nine months into the year, only about 50% of the budget for regional government spending had been executed. This suggests that a significant portion of the demand for their product-specifically for infrastructure-is still secured and less susceptible to immediate political gridlock. The company's strong reliance on the self-construction segment, which is more resilient to political shifts than large government projects, also acts as a natural buffer.

Mitigation Strategies and Actionable Takeaways

CPAC is not just sitting still; they have clear mitigation strategies for both financial and operational risks. Their strategy is simple: control what you can and diversify your demand.

Here's how they are managing the risks:

• Cost Control: They achieved a 14.4% increase in gross profit in Q3 2025, driven by operational efficiencies and lower costs for raw materials, coal, and energy. They are actively fighting the OpEx creep with cost-of-goods savings.
• Debt Reduction: The consistent debt amortization is a clear financial priority, keeping the net debt-to-EBITDA ratio low at 2.5x.
• Sustainable Innovation: The EcoSaco product, which is a fully dissolvable cement bag, is a great example of mitigating environmental, social, and governance (ESG) risk. It eliminates almost 16 million bags of waste in the first year alone, a smart move for long-term licensing and community relations.

The biggest risk is the OpEx creep. You need to see those administrative and selling expense growth rates slow down in Q4 2025. If they don't, that S/71.5 million net income for Q3 2025 could be lower next quarter.

For a deeper dive into who is betting on this strategy, you should check out Exploring Cementos Pacasmayo S.A.A. (CPAC) Investor Profile: Who's Buying and Why?

Your next step is to track CPAC's Q4 2025 OpEx figures; if the growth rate is still in the double digits, the margin pressure is defintely a sustained problem, not a one-off union bonus issue.

Growth Opportunities

You're looking for where Cementos Pacasmayo S.A.A. (CPAC) goes from here, and the answer is clear: infrastructure spending and regional dominance are the dual engines. The company is defintely positioned to capitalize on Peru's significant infrastructure and housing gap, translating that need into tangible revenue growth.

The core of their near-term opportunity lies in major public works. CPAC is actively involved in the 'Obras por Impuestos' (Works for Taxes) program, which lets private companies finance public infrastructure projects. This strategy secures large, predictable sales volumes for concrete and precast materials, bypassing some of the typical government procurement delays.

Here's the quick math on their momentum: for the first nine months of 2025 (9M25), consolidated revenues grew by a solid 7.3% compared to the same period in 2024. This growth is directly tied to a 6.8% increase in sales volume for cement, concrete, and precast materials, driven by both infrastructure and the self-construction market.

Future Revenue and Earnings Trajectory

Analysts project Cementos Pacasmayo S.A.A.'s full-year 2025 revenue to reach approximately S/2.04 billion (Peruvian Soles). For a US-based investor, that translates to an estimated revenue of around $630.67 million. This projection implies a modest but stable annual increase of about 3.38% over 2024, showing tempered optimism that accounts for margin pressures seen early in the year.

While the overall revenue growth is steady, the profitability picture is complex. Full-year Earnings Per Share (EPS) is estimated at around S/0.12, or a forward EPS of $0.17. Still, the company's effective debt management is a strong tailwind. Net income for the first nine months of 2025 reached S/172.0 million, a 15.6% increase year-over-year, largely due to higher operating income and lower interest payments from debt amortization.

The company's focus on cost efficiency is crucial. Gross profit in Q3 2025 increased by 14.4%, reflecting operational efficiencies and lower costs for raw materials like coal and energy.

Strategic Drivers and Competitive Edge

Cementos Pacasmayo S.A.A.'s competitive advantage is its near-monopolistic position in the Northern region of Peru, a market with significant unmet demand for housing and infrastructure. They are not just selling cement; they are selling solutions for major, multi-year projects.

Key growth drivers are concrete examples of this strategy:

• Major Infrastructure Projects: Sales of concrete, pavement, and mortar increased by 9.8% in Q2 2025, fueled by projects like the Piura Airport, Riverbank Defenses, and the Yanacocha project.
• Product Innovation: The company continues to push its higher-margin concrete and precast materials segments. Sales in this segment increased 19.5% for the first nine months of 2025.
• Technology and Resilience: They are leveraging Artificial Intelligence (AI) tools to enhance project pipelines and focusing on sustainable development, which positions them well for future, climate-resilient construction mandates.

This regional focus and integrated product offering give them a distinct moat (a sustainable competitive advantage). For ten consecutive years, the company has led the cement sector in the MERCO business and leadership ranking, underscoring its market strength and reputation.

If you want to dive deeper into the nuts and bolts of the balance sheet and valuation, you can read the full analysis here: Breaking Down Cementos Pacasmayo S.A.A. (CPAC) Financial Health: Key Insights for Investors.

Next step: Check the Q4 2025 earnings release date and look for updates on new infrastructure contract wins.