Unión 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 Floating Pension Funds 21.34% Nuevas Inversiones S.A. 57.80% Sindicato de Inversiones y Administración S.A. 43.40% Minor floating participation 10.96% 24.30% Inversiones Andino S.A. Cement Concrete Energy GEA Peru Chile - Colombia Sources: Company filings as of December 31 st, 2014 4
1.Overview Macroeconomic environment GDP Growth (annual variation %) Real GDP and Inflation (bn PEN and % ) 5.8% 4.1% 4.8% 4.7% 4.7% 3.9% 600 500 400 420 470 508 547 579 15.0% 13.0% 11.0% 9.0% 2.4% 1.7% 2.4% 2.2% 1.4% 2.2% 2.5% 0.2% 300 200 100 1.5% 3.4% 3.7% 2.8% 3.3% 7.0% 5.0% 3.0% 1.0% 0-1.0% Peru Chile Colombia Ecuador USA Mexico Brazil 2010 2013 2014e Real GDP Inflation Construction GDP vs. cement dispatches (variation %) Granted Infrastructure Investment (USD Billion) 17.8% 17.2% 15.8% 15.2% 8.9% 9.1% 1.2 3.6% 3.9% 2.9% 1.3% 4.0 3.6 2010 e 2014 2015 Sources: INEI, Apoyo, Latin Focus Construction GDP Peruvian Cement Dispatches Granted Projects begininng 2015 5
1.Overview Pipeline of infrastructure auctioned projects 2015-2018 N Project Company Location Investment (USD Millions) Construction start 1 Metro de Lima - Línea 2 Consorcio Nuevo Metro de Lima Centro 5,658 2015 2 Vía Expresa Javier Prado Graña y Montero Lima 900 Indefinido 3 Amp. Jorge Chávez Lima Airport Partners Lima 800 2015 4 Vía Parque Rímac 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 Concesión Vial del Sur Sur 200 2015 14 Vía Expresa Sur Graña y Montero Lima 200 2016 15 Amp. Red Vial 6 Coviperu Lima, Ica 200 Indefinido 16 Terminal Portuario General San Martín Consorcio Paracas Ica 182 2015 17 Muelle de minerales - Puerto del CallaoConsorcio Transportadora Callao Lima 150 2012 18 IIRSA Centro - Tramo II Consorcio Desarrollo Vial del Perú (Deviandes) Lima, Junín, Pasco 126 2013 19 Modernización del Aeropuerto de Pisco Aeropuertos del Perú Ica 107 2013 20 Amp. Red Vial 5 Norvial Lima 100 2014 Sources: Ositran, Proinversión, APOYO Consultoría Total investment 12,432 6
2. UNACEM Peru Condorcocha Plant, Tarma (3,950 m.a.s.l)
2. UNACEM Peru Overview Cement Plants On October 1 st, 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 UNACEM s 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 Atocongo 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 Condorcocha Location: Junín Clinker Capacity: 1.9 million MT Cement Capacity: 2.1 million MT Clinker Production(2014): 1.6 million MT Cement Production(2014): 1.9 million MT Limestone Reserves: 158 years 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 Financial Snapshot 2014 (USD MM) Distribution and Services Total Assets 2,799 Revenue 630 Progre-Sol Commercialization Hardware store with over 287 points of sale Supplies more than 7,200 independent hardware stores in the country EBITDA 258 EBITDA Margin 41% Local Ratings APOYO: AA Class: AAA Hatun-Sol Financing and Advising Product financing and advising families on building techniques Advices and provides financing to families and independent builders to finance cement and other construction products Duravía Solutions for road paving New service that offers efficient road paving techniques 8 Source: Company filings.
2. UNACEM Peru Peruvian cement market Group: Hochschild Location: Rioja San Martín Market Share: 2% Cement Capacity: 0.3 MT Clinker Capacity: 0.2 MT Group: Rizo-Patrón Location: Lima Atocongo Plant Junín Condorcocha Plant Market Share: 50% Cement Capacity: 7.6 million MT Clinker Capacity: 6.7 million MT Location: Pacasmayo - La Libertad Market Share: 19% Cement Cap: 2.9 million MT Clinker Capacity: 1.3 million MT Group: Gloria 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 9
2.UNACEM Peru Separated Unaudited Financial performance Revenues (USD Millions, 2014 accumulated) EBITDA and EBITDA Margin (USD Millions and %) 617 638 630 EBTIDA EBTIDA Margin 541 293 457 300 250 200 201 37.1% 215 241 37.8% 258 41.0% 42.0% 41.0% 40.0% 39.0% 38.0% 150 34.9% 37.0% 36.0% 143 100 35.0% 34.0% 50 33.0% 32.0% - 31.0% 2011 2012 2013 1Q14 2Q14 3Q14 4Q14 Net income (USD Millions) Net debt (USD Millions) 129 110 1,276 97 73 609 668 760 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 Concrete Segment Overview UNACEM s concrete segment consists of two companies Unión de Concreteras S.A. (UNICON) and Firth Industries S.A. (Firth), forming the largest concrete group in Peru Market Positioning UNICON and Firth have 56.0% of market share (70% in the relevant area) in the concrete segment (2014) UNICON was founded in May 1996 In 2011, UNICON acquired 100% of Firth shares UNICON & Firth provided a variety of services such as: readymixed concrete, concrete for mining, concrete for paving, pumping services, girders and concrete sleepers and aggregates Commercial strategy Specialized in megaprojects and large constructions Commercial strategy Specialized in small to medium projects and constructions Financial Snapshot 2014 (USD MM) Assets and Capacity Total Assets 300 Installed Capacity 9.2 (million m 3 per year) Revenue 351 EBITDA 50 Concrete Plants 58 Facilities in Lima 13 Facilities in the rest of Peru 22 EBITDA Margin 14% Mixer Trucks 519 Source: Unicon. 12
3. Unicon & Firth Financial performance Revenues (USD Millions) EBITDA and EBITDA Margin (USD Millions and %) 352 351 EBTIDA EBTIDA Margin 247 312 60 50 15.3% 47 48 50 15.5% 15.0% 40 38 15.1% 14.5% 30 13.6% 14.3% 14.0% 20 13.5% 10 13.0% - 12.5% Net income (USD Millions) Net debt (USD Millions) 29 197 21 157 16 17 108 128 Source: Unicon. 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 company s main customer is UNACEM (29% of total sales), though it has a portfolio of 13 additional customers The company s asset is the hydroelectric plant El Platanal which generates 220 MW CELEPSA s strategy is to develop a balanced, efficient and competitive portfolio of electricity generation Hydroelectric Power Plant El Platanal Location: Lima Generation Capacity: 220 MW Availability Index (Unit 1): 99.68% Availability Index (Unit 2): 99.94% 100% of the production is sold through PPAs In November 2014, Celepsa acquired Hidro Eléctrica Marañon S.R.L., a 20 MW with a 88 MW PPA. The hydroelectric power plant will start operations in 2017 Financial Snapshot 2014 (USD MM) Company structure Total Assets 378 Revenue 91 90% 10% EBITDA 36 50% 99% 99% EBITDA Margin 39% Hidro Eléctrica Marañon SRL Source: Celepsa. 15
4. Celepsa Financial performance Revenues (USD Millions ) EBITDA and EBITDA Margin (USD Millions and %) EBTIDA EBTIDA Margin 98 91 50 47 80.0% 68 78 45 40 35 40 40 69.2% 51.5% 36 70.0% 60.0% 30 40.7% 39.4% 50.0% 25 40.0% 20 30.0% 15 20.0% 10 10.0% 5 0 0.0% Net income (UDS Millions) Net debt (USD Millions) 16 170 13 130 117 106 6 1 Source: Celepsa. 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 Products and Brands Drake UNACEM s 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 2 nd and 3 rd 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 company s mission is to be recognized as the leading and most respected provider of construction materials 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 Financial Overview 2014 (USD MM) Business Strategic Plan Total Assets 489 Revenue 83 EBITDA -8 EBITDA Margin -9% Vertical Integration Strategic Alliances & Partnerships Vision Core Values Source: Skanon. 18
0.0 % -5.0% -10.0% -15.0% -20.0% -25.0% -30.0% -35.0% 5. Skanon / Drake Financial performance Revenues (USD Millions ) EBITDA and EBITDA Margin (USD Millions and %) 83 EBTIDA EBTIDA Margin 51 69 0-2 -4-9.7% -10.5% -9.3% 37-6 -5-8 -10-12 -31.8% -7-8 -14-12 Net income (UDS Millions) Net debt (USD Milliona) 119 113 113-13 105-23 -23-25 Source: Skanon. 19
6. UNACEM Ecuador
6. UNACEM Ecuador Company Description 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 Operations Otavalo 2 Lines: 1 Kiln SPH and 1 Kiln AS precalciner Location: Imbabura (100km North of Quito) Clinker Capacity: 1.0 million MT Cement Capacity: 1.5 million MT Production (2014): 1.5 million MT Financial Overview 2014 (USD MM) Ownership structure Total Assets 226 Revenue 187 100% Inversiones Imbabura S.A. 98.57% EBITDA 80 99.99% 99.99% EBITDA Margin 43% Source: UNACEM Ecuador. Cantyvol S.A. Lafarge Servicios Generales S.A. 21
44. 0% 42. 0% 40. 0% 38. 0% 36. 0% 34. 0% 32. 0% 6. UNACEM Ecuador S.A. Financial performance Revenues (USD Millions ) EBITDA and EBITDA Margin (USD Millions and %) 186 187 EBTIDA EBTIDA Margin 166 90 80 70 60 58 66 78 80 161 50 40 30 20 10 0 Net income (USD Millions) Net debt (USD Millions) 36 37 45 43 39 44 29 25 Source: UNACEM Ecuador. 22
7. Preansa
7. PREANSA Peru & Chile Company Description Production Capacity Prefabricados Andinos Perú S.A.C. (PREANSA Perú) is a subsidiary of UNACEM which mainly produces prestressed industrialized concrete structures Pillars Peru 90 m/day Pillars Chile 60 m/day The business has a strong growth potential and already has tripled sales in the past 3 years Industrial Belts 400 m/day Industrial Belts 300 m/day 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. Prestresse d light beams Prestresse d heavy beams 100 m/day 220 m/day Prestressed light beams Prestressed heavy beams Mezzanine Elements 120 m/day 60 m/day 300 m/day PREANSA has presence in Peru, Chile and, soon, Colombia Mezzanine Elements 140 m/day Wall panel 80 m/day Financial Overview 2014 (USD MM) Ownership structure Peru Chile Total Assets 16 Total Assets 29 50.0% 51.0% Revenue 8 Revenue 20 Prefabricados Andinos Perú S.A.C. Prefabricados Andinos S.A. (Chile) EBITDA 2 EBITDA 3 EBITDA Margin Source: Preansa. 30% EBITDA Margin 14% 100% Prefabricados Andinos Colombia S.A.S. 24
7. PREANSA Financial performance Revenues (USD Thousands ) EBITDA (USD Thousands ) Peru Chile Peru Chile 20,430 3,606 2,486 2,429 2,852 7,899 10,049 8,236 1,649 5,366 Net income (USD Thousands ) Net debt (USD Thousands ) Peru Chile Peru Chile 1,710 3,337 3,094 2,928 1,350 827 827 1,952 1,564 418 Source: Preansa. 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 Currency debt profile (USD Millions ) Debt profile (As of 4Q14) PEN, 290 Short term 15% USD, 1,330 Long term 85% Debt amortization profile (USD Millions) 748 235 222 234 135 46 2015 2016 2017 2018 2019 From 2020 UNACEM separeted Celepsa Unicon Skanon Preansa UNACEM Ecuador 27
Unión 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 Military government confiscates Cemento Andino and Cementos Lima UNICON is created from the merger of COPRESA and HORMEC 1916 1956 1967 1974 1994 1996 1999 Constitution of Compañía Peruana de Cemento Portland Cementos Lima S.A. is founded (predecessor of UNACEM) Cementos Lima is privatized for a second time, allowing the Rizo- Patrón group to gain control of the company 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 Drake Cement begins operations in the US. UNICON acquires Firth Expansion of kiln 1 from 4.5 million MT to 5.5 million MT in the Atocongo plant is concluded 2007 2008 2010 Cemento Andino is privatized and the Rizo-Patrón group recovers control of the company Compañía Eléctrica el Platanal S.A. ( CELEPSA ) hydro power plant begins its operations 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 developing new business segments and entering new markets in the region
Skanon UNACEM holds 94.6% of Drake Cement through wholly owned subsidiary Skanon Investments North America 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. South America UNACEM has several subsidiaries in Peru, country where it leads the cement industry with 50% market share Concrete market share: 60% Colombia Ecuador Peru 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 Chile