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Unin Andina

de Cementos
S.A.A
UNACEM S.A.A.
J.P. Morgan 6th Annual
Global Emerging Markets
Corporate Conference

February 23rd, 2015

Atocongo Plant, Lima

UNACEM S.A.A.

Agenda

1.Overview
2.UNACEM Peru
3.Unicon and Firth
4.Celepsa
5.Skanon / Drake
6.UNACEM Ecuador
7.Preansa
8.Consolidated Financial Highlights
Appendix

1. Overview

1.Overview
UNACEM at a glance

Nuevas
Inversiones S.A.
57.80%
Floating
Pension Funds

21.34%

Sindicato de Inversiones
y Administracin S.A.
43.40%
24.30%

Minor floating
participation

10.96%

Cement

Concrete

Inversiones
Andino S.A.

Energy

GEA

Peru Chile - Colombia

4
Sources: Company filings as of December 31st, 2014

1.Overview
Macroeconomic environment
GDP Growth

Real GDP and Inflation

(annual variation %)

(bn PEN and % )

5.8%

600

4.7%

4.8%

4.7%

4.1%

508

470

500

579

547

13.0%

420

3.9%

15.0%

11.0%

400
9.0%

2.4%

2.4%
2.2%

2.2%

1.7%

2.5%

300

7.0%

3.7%

3.4%

200

1.4%

2.8%

3.3%

1.5%

5.0%

3.0%

100

0.2%

1.0%

Peru

Chile

Colombia

Ecuador
2013

USA

Mexico

Brazil

17.2%

15.8%

2011

2014e

2012
Real GDP

Construction GDP vs. cement dispatches


(variation %)
17.8%

-1.0%

2010

2013

2014

Inflation

Granted Infrastructure Investment


(USD Billion)

15.2%

1.2
8.9%

3.6%

9.1%

3.9%
1.3%

2010

2011
Construction GDP

Sources: INEI, Apoyo, Latin Focus

2012

2013

Peruvian Cement Dispatches

4.0

3.6

2014

2015

2.9%

2014e

Granted

Projects begininng 2015

1.Overview
Pipeline of infrastructure auctioned projects 2015 - 2018
N

Project

Company

Location

Investment
(USD Millions)

Construction start

Centro

5,658

2015

1 Metro de Lima - Lnea 2

Consorcio Nuevo Metro de Lima

2 Va Expresa Javier Prado

Graa y Montero

Lima

900

Indefinido

3 Amp. Jorge Chvez

Lima Airport Partners

Lima

800

2015

4 Va Parque Rmac

OAS

Lima

750

2012

5 Rutas Nuevas de Lima

Odebrecht

Lima

590

2013

6 Longitudinal de la Sierra Tramo 2

Consierra Tramo II

La Libertad, Cajamarca

552

2015

7 Aeropuerto Internacional Chinchero

Consorcio Kuntur Wasi

Cusco

420

2016

8 Muelle Norte - Etapas 1 y 2

APM Terminals

Lima

370

2012

9 Red Vial 4 (Autopista del Norte)

Autopista del Norte

Lima, Ancash, La Libertad

340

2010

La Libertad, Lambayeque, Piura

300

2011

Arequipa

260

2014

Piura

227

2012

Sur

200

2015

Lima

200

2016

Lima, Ica

200

Indefinido

Ica

182

2015

Lima

150

2012

Lima, Junn, Pasco

126

2013

Ica

107

2013

Lima

100

2014

10 Autopista del Sol

Consorcio Vial del Sol

11 Muelle de Minerales - Puerto Matarani Tisur


12 Puerto de Paita

Terminales Portuarios
Euroandinos

13 Panamerica Sur

Consorcio Concesin Vial del Sur

14 Va Expresa Sur

Graa y Montero

15 Amp. Red Vial 6

Coviperu

16 Terminal Portuario General San Martn Consorcio Paracas


17 Muelle de minerales - Puerto del CallaoConsorcio Transportadora Callao
18 IIRSA Centro - Tramo II

Consorcio Desarrollo Vial del


Per (Deviandes)

19 Modernizacin del Aeropuerto de Pisco Aeropuertos del Per


20 Amp. Red Vial 5

Norvial
Total investment

12,432

6
Sources: Ositran, Proinversin, APOYO Consultora

2. UNACEM
Peru

Condorcocha Plant, Tarma (3,950 m.a.s.l)

2. UNACEM Peru
Overview

Cement Plants

On October 1st, 2012, UNACEM absorbed Cemento Andino to


consolidate the largest cement company in Peru

UNACEM has subsidiaries that provide power supply, raw materials


supply, distribution channels and warehouse storage of UNACEMs
products

The Company has two cement plants, Atocongo and Condorcocha,


which operate in the central region of the country where most of the
population lives

The Atocongo plant has an underground conveyor belt which leads


directly to the Conchan Pier (port) in the Pacific Ocean, facilitating
cement exports and raw material imports

Both plants have their own power generation through two hydro
power plants and one thermo power plant that provides a significant
source of energy

Atocongo
Location: Lima

Location: Junn

Clinker Capacity: 4.8 million MT

Clinker Capacity: 1.9 million MT

Cement Capacity: 5.5 million MT

Cement Capacity: 2.1 million MT

Clinker Production(2014): 4.3million MT

Clinker Production(2014): 1.6 million MT

Cement Production(2014): 3.8 million MT

Cement Production(2014): 1.9 million MT

Limestone Reserves: 36 years

Limestone Reserves: 158 years

Distribution and Services

Financial Snapshot 2014 (USD MM)


Total Assets

2,799

Progre-Sol
Commercialization

Revenue

630

EBITDA

258

Hardware store with over 287


points of sale

Hatun-Sol

EBITDA Margin

41%

Local Ratings

APOYO: AA
Class: AAA

Financing and Advising


Product financing and
advising families on
building techniques

Durava

Source: Company filings.

Condorcocha

Solutions for road paving

Supplies more than 7,200


independent hardware stores in the
country

Advices and provides financing to


families and independent builders
to finance cement and other
construction products

New service that offers efficient


road paving techniques

2. UNACEM Peru
Peruvian cement market

Group: Hochschild

Location: Rioja San Martn


Market Share: 2% | Cement Capacity: 0.3 MT
Clinker Capacity: 0.2 MT

Group: Rizo-Patrn
Location: Pacasmayo - La Libertad
Market Share: 19% | Cement Cap: 2.9 million MT
Clinker Capacity: 1.3 million MT

Location:
Lima Atocongo Plant
Junn Condorcocha Plant

Group: Gloria

Market Share: 50%


Cement Capacity: 7.6 million MT
Clinker Capacity: 6.7 million MT

Location: Juliaca Puno


Market Share: 5% | Cement Cap.: 0.3 million MT
Clinker Capacity: 0.3 million MT
Location : Lima
Market Share: 5%
Imports: 0.5 million MT
Location: Yura Arequipa
Market Share: 15% | Cement Cap.: 3.0 million MT
Clinker Capacity: 2.0 million MT

*Others: 4%
Source: Asocem, INEI, SUNAT

2.UNACEM Peru
Separated Unaudited Financial performance
Revenues

EBITDA and EBITDA Margin

(USD Millions, 2014 accumulated)


617

(USD Millions and %)

638

630

EBTIDA

EBTIDA Margin

541

258

300

457

241
250

201
200

293

215
37.8%

42.0%

41.0%

41.0%

40.0%

39.0%

37.1%

38.0%

37.0%

34.9%

150

143

36.0%

35.0%
100
34.0%

33.0%

50

32.0%

2011

2012

2013

1Q14

2Q14

3Q14

4Q14

31.0%

2011

2012

Net income

2013

2014

Net debt

(USD Millions)

(USD Millions)

129
1,276

110
97
73
609

2011

Source: Company filings.

2012

2013

2014

2011

668

2012

760

2013

2014

Exchange rate from PEN to USD: 2011-2013: 2.796 PEN/USD and 2014:2.989 PEN/USD

10

3. Unicon &
Firth

3. Unicon & Firth


Concrete Segment Overview

UNACEMs concrete segment consists of two companies Unin de


Concreteras S.A. (UNICON) and Firth Industries S.A. (Firth),
forming the largest concrete group in Peru

UNICON was founded in May 1996

In 2011, UNICON acquired 100% of Firth shares

UNICON & Firth provided a variety of services such as: ready-

mixed concrete, concrete for mining, concrete for paving,


pumping services, girders and concrete sleepers and aggregates

Market Positioning

UNICON and Firth have 56.0% of market share (70% in the


relevant area) in the concrete segment (2014)

Commercial strategy
Specialized in
megaprojects and large
constructions

Financial Snapshot 2014 (USD MM)

Total Assets

Revenue

300

Commercial strategy
Specialized in small to
medium projects and
constructions

Assets and Capacity


Installed Capacity

9.2 (million m3 per year)

Concrete Plants

58

Facilities in Lima

13

351

EBITDA

50

Facilities in the rest of Peru

22

EBITDA Margin

14%

Mixer Trucks

519

Source: Unicon.

12

3. Unicon & Firth


Financial performance
Revenues

EBITDA and EBITDA Margin

(USD Millions)

(USD Millions and %)


352

EBTIDA

351

312
60

15.3%

EBTIDA Margin
47

15.5%

48

247

50

50

40

15.0%

38

15.1%

14.5%

13.6%

30

14.3%

20

13.5%

10

13.0%

2011

2012

2013

2014

12.5%

2011

2012

Net income

2013

(USD Millions)

29

197
157

21

2011

Source: Unicon.

128

17

2012

2014

Net debt

(USD Millions)

16

14.0%

2013

108

2014

2011

2012

2013

2014

Exchange rate from PEN to USD: 2011-2013: 2.796 PEN/USD and 2014:2.989 PEN/USD

13

4. Celepsa

4. Celepsa
Company description

The companys main customer is UNACEM (29% of total sales),


though it has a portfolio of 13 additional customers

Hydroelectric Power Plant

El Platanal
Location: Lima

The companys asset is the hydroelectric plant El Platanal which


generates 220 MW

Generation Capacity: 220 MW

CELEPSAs strategy is to develop a balanced, efficient and


competitive portfolio of electricity generation

Availability Index (Unit 2): 99.94%

100% of the production is sold through PPAs


In November 2014, Celepsa acquired Hidro Elctrica Maraon
S.R.L., a 20 MW with a 88 MW PPA. The hydroelectric power plant
will start operations in 2017

Availability Index (Unit 1): 99.68%

Financial Snapshot 2014 (USD MM)

Total Assets

378

Revenue

91

EBITDA

36

EBITDA Margin

39%

Source: Celepsa.

Company structure

90%

50%

10%

99%

99%

Hidro
Elctrica
Maraon SRL

15

4. Celepsa
Financial performance
Revenues

EBITDA and EBITDA Margin

(USD Millions )

(USD Millions and %)


EBTIDA
98

91

50

47

80.0%

40

45

78

EBTIDA Margin

40

40

68

35

69.2%

51.5%

70.0%

36
60.0%

40.7%

30

39.4%

25

50.0%

40.0%

20
30.0%

15
20.0%
10

10.0%
5

2011

2012

2013

2014

0.0%

2011

2012

Net income

2013

2014

Net debt

(UDS Millions)

(USD Millions)

170

16

130

13

117

106

1
2011

Source: Celepsa.

2012

2013

2014

2011

2012

2013

2014

Exchange rate from PEN to USD: 2011-2013: 2.796 PEN/USD and 2014:2.989 PEN/USD

16

5. Skanon /
Drake

5. Skanon / Drake
Company Description

Drake UNACEMs start up subsidiary located in Arizona, USA, with


state-of-the-art facilities

There are six main competitors in the market where Drake holds
the 2nd and 3rd largest market share in concrete and cement
respectively

UNACEM took advantage of the low prices during the crisis to build
Drake Cement

Drake has a strong growth potential as the United States recovers


from the crisis

The companys mission is to be recognized as the leading and


most respected provider of construction materials

Products and Brands

Financial Overview 2014 (USD MM)

Total Assets

489

Revenue

83

EBITDA

-8

Various concrete products depending on


specifications
Grout
Slurry
Shotcrete

ABC (Aggregate Base Course)


Crushed rock
Concrete and mortar sand
Recycled concrete and asphalt

ASTM C 150 Type II/V (LA)


Clinker Type II/V
Off-spec cement

Business Strategic Plan

Strategic
Alliances &
Partnerships
Vertical
Integration

Core Values

Vision
EBITDA Margin

-9%

18
Source: Skanon.

5. Skanon / Drake
Financial performance
Revenues

EBITDA and EBITDA Margin

(USD Millions )

(USD Millions and %)


EBTIDA

83

69

0.0 %

2011

-2
51

EBTIDA Margin

2012
-9.7%

2013

2014

-10.5%

-9.3%

-5.0%

-4

37

-10.0%

-5

-6

-15.0%

-8
-10

-7

-20.0%

-8
-25.0%

-31.8%

-12
2011

2012

2013

2014

-30.0%

-12

-14

-35.0%

Net income

Net debt

(UDS Millions)

2011

2012

2013

(USD Milliona)

2014

119

113

113

-13
105

-23

-23
-25
2011

Source: Skanon.

2012

2013

2014

19

6. UNACEM
Ecuador

6. UNACEM Ecuador
Company Description

Operations
Otavalo

UNACEM Ecuador was acquired during 2014, consolidating and closing


the transaction by mid November 2014 with all regulatory permits

2 Lines: 1 Kiln SPH and 1 Kiln AS precalciner

The company has the widest product portfolio in the market, tailored

Location: Imbabura (100km North of Quito)

for the construction sector

Clinker Capacity: 1.0 million MT

UNACEM Ecuador is a fully integrated company with high performance

Cement Capacity: 1.5 million MT

assets

Production (2014): 1.5 million MT

UNACEM Ecuador has a prime logistical operation with 100% bags


delivered door to door

Excellence in stakeholder relationship

The plant is currently operating at 100% capacity

Financial Overview 2014 (USD MM)

Total Assets

Ownership structure

226
100%
Inversiones

Revenue

Imbabura S.A.

187

98.57%

EBITDA

80
99.99%

EBITDA Margin

43%
Cantyvol S.A.

Source: UNACEM Ecuador.

99.99%

Lafarge
Servicios
Generales S.A.

21

6. UNACEM Ecuador S.A.


Financial performance
Revenues

EBITDA and EBITDA Margin

(USD Millions )

(USD Millions and %)


186

187

EBTIDA

EBTIDA Margin

90

78

80

44. 0%

80

66

42. 0%

70

58
60

166

40. 0%

50

161

38. 0%

40

30

36. 0%

20
34. 0%

10

2011

2012

2013

2014

32. 0%

2011

2012

Net income

2014

Net debt

(USD Millions)

(USD Millions)

45
36

2013

44

43
39

37

29
25

2011

Source: UNACEM Ecuador.

2012

2013

2014

2011

2012

2013

2014

22

7. Preansa

7. PREANSA Peru & Chile


Company Description

Production Capacity

Prefabricados Andinos Per S.A.C. (PREANSA Per) is a subsidiary


of UNACEM which mainly produces prestressed industrialized
concrete structures

The business has a strong growth potential and already has


tripled sales in the past 3 years

PREANSA Peru was founded in 2007 with UNACEM holding 50% of


ownership

In January 2014, UNACEM acquired 51% of ownership of Preansa


Chile. An it is starting to develop a plant in Colombia that will start
operations in 1Q15.

PREANSA has presence in Peru, Chile and, soon, Colombia

Peru
Pillars

90 m/day

Pillars

60 m/day

Industrial
Belts

400 m/day

Industrial Belts

300 m/day

Prestresse
d light
beams

100 m/day

Prestressed light
beams

120 m/day

Prestressed
heavy beams

60 m/day

Mezzanine
Elements

300 m/day

Wall panel

80 m/day

Prestresse
d heavy
beams

220 m/day

Mezzanine
Elements

140 m/day

Financial Overview 2014 (USD MM)


Peru

Chile

Ownership structure

Chile

Total
Assets

16

Revenue

Revenue

20

EBITDA

EBITDA

30%

EBITDA
Margin

Total
Assets

29

50.0%
Prefabricados
Andinos Per S.A.C.

51.0%
Prefabricados
Andinos S.A. (Chile)

100%

EBITDA
Margin
Source: Preansa.

14%

Prefabricados
Andinos Colombia
S.A.S.

24

7. PREANSA
Financial performance
Revenues

EBITDA

(USD Thousands )
Peru

(USD Thousands )

Chile

Peru

Chile

20,430

3,606
2,852
2,486

2,429

10,049
1,649

8,236

7,899
5,366

2011

2012

2013

2014

2011

2012

Net income

2014

Net debt

(USD Thousands )

(USD Thousands )
Peru

Peru

2013

Chile

Chile
3,337

1,710

3,094

2,928

1,350
1,952
827

1,564

827

418

2011

Source: Preansa.

2012

2013

2014

2011

2012

2013

2014

Exchange rate from PEN to USD: 2011-2013: 2.796 PEN/USD and 2014:2.989 PEN/USD

25

8. Consolidated
Financial
Highlights

8. Consolidated Financial Highlights


Consolidated debt

Debt profile

Currency debt profile

(As of 4Q14)

(USD Millions )

Short term
15%

PEN, 290

Long term
85%

USD, 1,330

Debt amortization profile


(USD Millions)

748

235

234

222

135
46

2015

2016
UNACEM separeted

2017
Celepsa

Unicon

2018
Skanon

2019
Preansa

From 2020
UNACEM Ecuador

27

Unin Andina
de Cementos
S.A.A UNACEM S.A.A.

J.P. Morgan 6th Annual


Global Emerging Markets
Corporate Conference
February 23rd, 2015
Atocongo Plant, Lima

Appendix

1.Overview
History
Cemento Andino
starts the
construction of the
Condorcocha plant

1916

Constitution of
Compaa Peruana
de Cemento
Portland

1956

Military government
confiscates Cemento
Andino and
Cementos Lima

1967

Cementos Lima S.A.


is founded
(predecessor of
UNACEM)

1974

UNICON is created
from the merger of
COPRESA and
HORMEC

1994

Cementos Lima is
privatized for a
second time,
allowing the RizoPatrn group to gain
control of the
company

1996

1999

Cementos Lima
triples its cement
production capacity
(from 1.5 million MT
to 4.5 million MT)

UNACEM has almost 60 years of successful operations in the Peruvian


market

1.Overview
History (cont.)

Atocongo Plant
Conchan Pier
underground
conveyor belt is
completed

2007

Cemento Andino is
privatized and the
Rizo-Patrn group
recovers control of
the company

2008

Drake Cement
begins operations in
the US.
UNICON acquires
Firth

2010

Compaa Elctrica
el Platanal S.A.
(CELEPSA) hydro
power plant begins
its operations

2011

Expansion of kiln 1
from 4.5 million MT
to 5.5 million MT in
the Atocongo plant
is concluded

2012

UNACEM is founded
as a result of a
merger between
Cementos Lima and
Cemento Andino.
Condorcocha kiln IV
expansion is
concluded

2013

2014

UNACEM acquires
Lafarge in Ecuador
and is now present
in 5 countries: Peru,
Ecuador, U.S., Chile
and Colombia

developing new business segments and entering new markets in the


region

North America

Skanon

UNACEM holds 94.6% of Drake


Cement through wholly owned
subsidiary Skanon Investments

In 2013, UNACEM constituted a


Preansa subsidiary in Colombia
which is expected to start operations
in 4Q15
Arizona - USA

In November 2014, UNACEM


acquired 98.57% of Lafarge
Cementos S.A today UNACEM
Ecuador S.A.

UNACEM has several subsidiaries in


Peru, country where it leads the
cement industry with 50% market
share
Concrete market share: 60%

In January 2014, the board of


directors approved the acquisition of
51% of Prefabricados Andinos S.A.
(Preansa) in Chile for US$ 7.1 MM

South America
Colombia
Ecuador
Peru

Chile

2. UNACEM Peru
Vertical integration
Energy Supply

Raw Material Supply

Compaa Elctrica el Platanal (CELEPSA)


operates a 220MW hydroelectric power plant
(UNACEM owns 90% of CELEPSA)

GEA
Carpapata
I and
Carpapata
II

Generacin Elctrica Atocongo (GEA) operates


Atocongos thermo plant (41.8 MW) supplying
electricity during peak hours

UNACEM has enough limestone reserves to supply its own demand for the
next 158 years in Condorocha and 36 years in Atocongo

Atocongos plant reserves are located beside the facilities which considerably
reduces transportation costs

Carpapata
I and Carpapata
II are 2
hydroelectric power plants located in Junin that
provide part of the power to Condorcocha plant

Atocongo and Condorcocha Plants

Distribution Network

Progre-Sol is the largest


hardware store in Peru
(exclusive for UNACEM) with
287 points of sale
Additionally, Progre-Sol
supplies 7,200+ independent
hardware stores

Conveyor Belt + Conchan Pier

UNACEM exports a portion of its production and imports


raw materials through the Conchan Pier

The conveyor belt allows materials to get transported


from the plant to the Pier and vice versa

Volumes of concrete for Lima

More than 4 million


M3 of concrete required

Lnea 2 del Metro

2,300,000

5 years

Carretera Ambo Oyon

480,000

18 months

Eje Vial Javier Prado La Molina


Faucett

300,000

4 years

Conexin La Molina Angamos Lima

250,000

2 years

Tunel de Gambetta

220,000

1 year

Parques de Comas

200,000

8 months

Centro Comercial Sur

90,000

1 year

Prolongacin Va Expresa

73,000

2 years

Eje Vial Javier Prado La Marina


Faucett

73,000

2 years

Edificios de Viviendas Villanova

67,227

7 years

34

3. Unicon & Firth


Full range of products and services
1

Ready-Mixed Concrete

519 mixer trucks

3,210 million m3 dispatched


annually
US$ 294.1 MM sold in 2013

Concrete for Mining

Concrete ready-mix, shotcrete


services

Concrete production: 7,200 m3


per month

Shotcrete releases: 5,800 m3 per


month

149 concrete pumps


Annual pumping 2013: 1.8 million
m3
US$ 23.5 MM in 2013

Specialized in the construction of


urban pavements and roads
3 pavers with a capacity of 180
linear meters per hour
From 2 to 7.4 MT width, and
thickness from 15 to 40 cm

Pumping Service

Concrete for Paving

Girders and Concrete Sleepers

Aggregates

Capacity of concrete sleepers:


180,000 units

Production of fine and coarse


aggregates in own quarries

400,000+ units produced to date

100% market share

Owns 5 different quarries and 2


are a in development process

Capacity: 8.4 million MT