UNACEM: J.P. Morgan 6th Annual Global Emerging Markets Corporate Conference (PDF)

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

Concrete Cement Energy

Nuevas Inversiones S.A.

Sindicato de Inversiones y Administracin S.A.

Inversiones Andino S.A.

Floating Pension Funds

Minor floating participation

24.30%

GEA

21.34%

10.96%

57.80%

43.40%

Sources: Company filings as of December 31st, 2014

4

Peru Chile - Colombia

http://www.unicon.com.pe/http://www.celepsa.com/

1.Overview

Macroeconomic environment

GDP Growth (annual variation %)

Real GDP and Inflation (bn PEN and % )

Construction GDP vs. cement dispatches (variation %)

Granted Infrastructure Investment (USD Billion)

420

470 508

547 579

1.5% 3.4% 3.7% 2.8% 3.3%

-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

0

100

200

300

400

500

600

2010 2011 2012 2013 2014

Real GDP Inflation

17.8%

3.6%

15.8%

8.9%

1.3%

17.2%

3.9%

15.2%

9.1%

2.9%

2010 2011 2012 2013 2014e

Construction GDP Peruvian Cement Dispatches

4.0 3.6

1.2

2014 2015

Granted Projects begininng 2015

Sources: INEI, Apoyo, Latin Focus

5

5.8%

4.1%

4.7% 4.7%

2.2%

1.4%

2.5% 2.4%

1.7%

4.8%

3.9%

2.4% 2.2%

0.2%

Peru Chile Colombia Ecuador USA Mexico Brazil

2013 2014e

1.Overview

Pipeline of infrastructure auctioned projects 2015 - 2018

Sources: Ositran, Proinversin, APOYO Consultora

6

N Project Company Location Investment

(USD Millions) Construction start

1 Metro de Lima - Lnea 2 Consorcio Nuevo Metro de Lima Centro 5,658 2015

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

10 Autopista del Sol Consorcio Vial del Sol La Libertad, Lambayeque, Piura 300 2011

11 Muelle de Minerales - Puerto Matarani Tisur Arequipa 260 2014

12 Puerto de Paita Terminales Portuarios Euroandinos

Piura 227 2012

13 Panamerica Sur Consorcio Concesin Vial del Sur Sur 200 2015

14 Va Expresa Sur Graa y Montero Lima 200 2016

15 Amp. Red Vial 6 Coviperu Lima, Ica 200 Indefinido

16 Terminal Portuario General San Martn Consorcio Paracas Ica 182 2015

17 Muelle de minerales - Puerto del Callao Consorcio Transportadora Callao Lima 150 2012

18 IIRSA Centro - Tramo II Consorcio Desarrollo Vial del Per (Deviandes)

Lima, Junn, Pasco 126 2013

19 Modernizacin del Aeropuerto de Pisco Aeropuertos del Per Ica 107 2013

20 Amp. Red Vial 5 Norvial Lima 100 2014

Total investment 12,432

2. UNACEM Peru

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

2. UNACEM Peru

Overview

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

Cement Plants

Location: Lima

Clinker Capacity: 4.8 million MT

Cement Capacity: 5.5 million MT

Clinker Production(2014): 4.3million MT

Cement Production(2014): 3.8 million MT

Limestone Reserves: 36 years

Atocongo

Location: Junn



Clinker Production(2014): 1.6 million MT

Cement Production(2014): 1.9 million MT

Limestone Reserves: 158 years

Condorcocha

Commercialization

Hardware store with over 287 points of sale

Progre-Sol

Hatun-Sol

Financing and Advising

Product financing and advising families on building techniques

Durava

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

Distribution and Services Financial Snapshot 2014 (USD MM)

Total Assets 2,799

Revenue 630

EBITDA 258

EBITDA Margin 41%

Local Ratings APOYO: AA

Class: AAA

Source: Company filings.

8

2. UNACEM Peru

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

Market Share: 50%



Location: Rioja San Martn

Market Share: 2% | Cement Capacity: 0.3 MT

Clinker Capacity: 0.2 MT

Location: Yura Arequipa

Market Share: 15% | Cement Cap.: 3.0 million MT


Location: Juliaca Puno

Market Share: 5% | Cement Cap.: 0.3 million MT


*Others: 4%

Group: Gloria

Group: Hochschild

Group: Rizo-Patrn

Location : Lima

Market Share: 5%

Imports: 0.5 million MT

Peruvian cement market

Source: Asocem, INEI, SUNAT

9

2.UNACEM Peru

Separated Unaudited Financial performance

Revenues (USD Millions, 2014 accumulated)

EBITDA and EBITDA Margin (USD Millions and %)

Net income (USD Millions)

Net debt (USD Millions)

541

617 638

143

293

457

630

2011 2012 2013 1Q14 2Q14 3Q14 4Q14

201 215

241

258

37.1%

34.9%

37.8% 41.0%

31.0%

32.0%

33.0%

34.0%

35.0%

36.0%

37.0%

38.0%

39.0%

40.0%

41.0%

42.0%

-

50

100

150

200

250

300

2011 2012 2013 2014

EBTIDA EBTIDA Margin

110

129

73

97

2011 2012 2013 2014

609 668

760

1,276

2011 2012 2013 2014

Source: Company filings. 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

UNICON and Firth have 56.0% of market share (70% in the relevant area) in the concrete segment (2014)

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

Concrete Segment Overview Market Positioning

Financial Snapshot 2014 (USD MM)

Total Assets 300

Revenue 351

EBITDA 50

EBITDA Margin 14%

Installed Capacity 9.2 (million m3 per year)

Concrete Plants 58

Facilities in Lima 13

Facilities in the rest of Peru 22

Mixer Trucks 519

Assets and Capacity

12

Commercial strategy

Specialized in megaprojects and large constructions

Commercial strategy

Specialized in small to medium projects and constructions

Source: Unicon.

http://www.unicon.com.pe/

3. Unicon & Firth

Financial performance

Revenues (USD Millions)




Source: Unicon.

247

312

352 351

2011 2012 2013 2014

38

47

48 50

15.3%

15.1%

13.6% 14.3%

12.5%

13.0%

13.5%

14.0%

14.5%

15.0%

15.5%

-

10

20

30

40

50

60

2011 2012 2013 2014


16

21

17

29

2011 2012 2013 2014

197

108

128

157

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 Hydroelectric Power Plant

Financial Snapshot 2014 (USD MM)

Total Assets 378

Revenue 91

EBITDA 36

EBITDA Margin 39%

Company structure

15

The companys main customer is UNACEM (29% of total sales), though it has a portfolio of 13 additional customers

The companys asset is the hydroelectric plant El Platanal which generates 220 MW

CELEPSAs strategy is to develop a balanced, efficient and competitive portfolio of electricity generation

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

Location: Lima

Generation Capacity: 220 MW

Availability Index (Unit 1): 99.68%

Availability Index (Unit 2): 99.94%

El Platanal

Source: Celepsa.

Hidro Elctrica

Maraon SRL

90% 10%

99% 99% 50%

4. Celepsa


Revenues (USD Millions )


Net income (UDS Millions)


16 Source: Celepsa.

68

78

98 91

2011 2012 2013 2014

47

40 40 36

69.2% 51.5%

40.7% 39.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

0

5

10

15

20

25

30

35

40

45

50

2011 2012 2013 2014


16

13

1

6

2011 2012 2013 2014

170

130 117

106

2011 2012 2013 2014

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

5. Skanon / Drake

5. Skanon / Drake

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

Business Strategic Plan

Company Description

Financial Overview 2014 (USD MM)

Total Assets 489

Revenue 83

EBITDA -8

EBITDA Margin -9%

Vision

Vertical Integration

Strategic Alliances &

Partnerships

Core Values

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

18 Source: Skanon.

5. Skanon / Drake




Net income (UDS Millions)

Net debt (USD Milliona)

Source: Skanon.

37

51

69

83

2011 2012 2013 2014-12

-5

-7 -8

-31.8%

-9.7% -10.5% -9.3%

-35.0%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0 %

-14

-12

-10

-8

-6

-4

-2

02011 2012 2013 2014


-13

-23 -23

-25

2011 2012 2013 2014

105

113

119

113

2011 2012 2013 201419

6. UNACEM Ecuador

6. UNACEM Ecuador

Operations

Ownership structure

Company Description


21

UNACEM Ecuador was acquired during 2014, consolidating and closing

the transaction by mid November 2014 with all regulatory permits

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

for the construction sector

UNACEM Ecuador is a fully integrated company with high performance

assets

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

2 Lines: 1 Kiln SPH and 1 Kiln AS precalciner

Location: Imbabura (100km North of Quito)



Production (2014): 1.5 million MT

Otavalo

Total Assets 226

Revenue 187

EBITDA 80

EBITDA Margin 43%

Inversiones

Imbabura S.A.

Cantyvol S.A. Lafarge Servicios

Generales S.A.

100%

98.57%

99.99% 99.99%

Source: UNACEM Ecuador.

6. UNACEM Ecuador S.A.






Source: UNACEM Ecuador.

161

166

186 187

2011 2012 2013 2014

58

66

78 80

32. 0%

34. 0%

36. 0%

38. 0%

40. 0%

42. 0%

44. 0%

0

10

20

30

40

50

60

70

80

90

2011 2012 2013 2014


36 37

45 43

2011 2012 2013 2014

39

44

29

25

2011 2012 2013 201422

7. Preansa

7. PREANSA Peru & Chile

Production Capacity

Ownership structure

Company Description


24

Peru

Total Assets

16

Revenue 8

EBITDA 2

EBITDA Margin

30%

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

Industrial Belts

400 m/day

Prestressed light beams

100 m/day

Prestressed heavy beams

220 m/day

Mezzanine Elements

140 m/day

Chile

Pillars 60 m/day

Industrial Belts 300 m/day

Prestressed light beams

120 m/day

Prestressed heavy beams

60 m/day

Mezzanine Elements

300 m/day

Wall panel 80 m/day

Prefabricados Andinos Per S.A.C.

Prefabricados Andinos S.A. (Chile)

Prefabricados Andinos Colombia

S.A.S.

51.0%

100%

50.0%

Source: Preansa.

Chile

Total Assets

29

Revenue 20

EBITDA 3

EBITDA Margin

14%

7. PREANSA


Revenues (USD Thousands )

EBITDA (USD Thousands )

Net income (USD Thousands )

Net debt (USD Thousands )

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

25

5,366

7,899

10,049

8,236

20,430

2011 2012 2013 2014

Peru Chile

1,649

2,486

3,606

2,429

2,852

2011 2012 2013 2014

Peru Chile

418

1,350

1,710

827 827

2011 2012 2013 2014

Peru Chile

3,337 3,094

1,952

1,564

2,928

2011 2012 2013 2014

Peru Chile

8. Consolidated Financial Highlights

8. Consolidated Financial Highlights

Consolidated debt

Debt amortization profile (USD Millions)

Currency debt profile (USD Millions )

USD, 1,330

PEN, 290

Short term 15%

Long term 85%

Debt profile (As of 4Q14)

27

2015 2016 2017 2018 2019 From 2020

UNACEM separeted Celepsa Unicon Skanon Preansa UNACEM Ecuador

222 234

135

46

748

235

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

UNACEM has almost 60 years of successful operations in the Peruvian market

Cementos Lima S.A. is founded

(predecessor of UNACEM)

Military government confiscates Cemento

Andino and Cementos Lima

Cementos Lima is privatized for a

second time, allowing the Rizo-

Patrn group to gain control of the

company

Cemento Andino starts the

construction of the Condorcocha plant

Constitution of Compaa Peruana

de Cemento Portland

UNICON is created from the merger of

COPRESA and HORMEC

Cementos Lima triples its cement

production capacity (from 1.5 million MT

to 4.5 million MT)

1974 1994 1996 1999 1967 1916 1956

1.Overview

History (cont.)

developing new business segments and entering new markets in the region

Drake Cement begins operations in

the US. UNICON acquires

Firth

2011 2012 2013 2014

UNACEM is founded as a result of a

merger between Cementos Lima and

Cemento Andino. Condorcocha kiln IV

expansion is concluded

UNACEM acquires Lafarge in Ecuador and is now present

in 5 countries: Peru, Ecuador, U.S., Chile

and Colombia

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

is concluded

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

the company

2007 2008 2010

Atocongo Plant Conchan Pier underground

conveyor belt is completed

Compaa Elctrica el Platanal S.A.

(CELEPSA) hydro power plant begins

its operations

South America

North America

Arizona - USA

Ecuador

Peru

UNACEM holds 94.6% of Drake Cement through wholly owned subsidiary Skanon Investments

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

In 2013, UNACEM constituted a Preansa subsidiary in Colombia which is expected to start operations in 4Q15

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%

Colombia

Chile

Skanon

http://www.celepsa.com/http://www.unicon.com.pe/

2. UNACEM Peru

Vertical integration

Compaa Elctrica el Platanal (CELEPSA) operates a 220MW hydroelectric power plant (UNACEM owns 90% of CELEPSA)

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

Energy Supply Raw Material Supply

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

Atocongo and Condorcocha Plants

Distribution Network

Generacin Elctrica Atocongo (GEA) operates Atocongos thermo plant (41.8 MW) supplying electricity during peak hours

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

GEA

Carpapata

I and

Carpapata

II

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

Conveyor Belt + Conchan Pier

33

http://www.celepsa.com/

Lnea 2 del Metro

Carretera Ambo Oyon

Eje Vial Javier Prado La Molina Faucett

Conexin La Molina Angamos - Lima

Tunel de Gambetta

Parques de Comas

Centro Comercial Sur

Prolongacin Va Expresa

Eje Vial Javier Prado La Marina Faucett

Edificios de Viviendas Villanova

More than 4 million M3 of concrete required

73,000 2 years

90,000 1 year

200,000 8 months

220,000 1 year

250,000 2 years

300,000 4 years

480,000 18 months

67,227 7 years

73,000 2 years

34

Volumes of concrete for Lima 2,300,000 5 years

Ready-Mixed Concrete Concrete for Mining Concrete for Paving

Pumping Service Girders and Concrete Sleepers Aggregates

Concrete ready-mix, shotcrete services

Concrete production: 7,200 m3 per month

Shotcrete releases: 5,800 m3 per month

519 mixer trucks

3,210 million m3 dispatched annually

US$ 294.1 MM sold 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

Capacity of concrete sleepers: 180,000 units

400,000+ units produced to date

100% market share

149 concrete pumps Annual pumping 2013: 1.8 million

m3 US$ 23.5 MM in 2013

Production of fine and coarse aggregates in own quarries

Owns 5 different quarries and 2 are a in development process

Capacity: 8.4 million MT

1 2 3

6 5 4

35

Full range of products and services

3. Unicon & Firth

Documents

UNACEM: J.P. Morgan 6th Annual Global Emerging Markets Corporate Conference (PDF)