Aenza SAA (AENZ) 2023 Q2 法說會逐字稿

Good afternoon and welcome to the Aenza Second Quarter of 2023 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded. Presenting today on behalf of the company are Andre Mastrobuono, CEO; and Oscar Pando, Vice President of Corporate Control and Planning; and Fernando Rodrigo, VP of Corporate Finance and Business Development. Now I'd like to turn the conference over to Andre Mastrobuono, CEO. Please go ahead, sir.

Good morning, and thank you for joining us on this earnings call. I will provide a brief overview of the significant events that have taken place in recent weeks. Following my remarks, Oscar Pando, Vice President of Corporate Control and Planning will present the results for the second quarter of this year. At the end of the presentation, we will have a moment to answer your questions. Fernando Rodrigo, Vice President of Corporate Finance and Business Development, will join us for the Q&A session. .

Let me start by saying that Aenza, in seeing a significant move to strength our finance department and support our growth strategy. appointed Mr. (inaudible) as our new Vice President of Corporate Control and Financial Planning. Mr. (inaudible) has a robust background in financial planning, debt structuring, accounting and tax planning, among other areas.

In the coming weeks, we will provide updates on the new responsibilities for Oscar Pando, who has excelled in his role as Vice President of Corporate Control and Planning. He will continue to be a critical member of Finances team. This recent addition emphasize (inaudible) commitment, sorry, to achieve our objectives for sustainable regional growth.

On the status of legal proceedings, as informed in the last earnings call in March this year, we reached an agreement with the Ad Hoc Public Posercutor's Office to comply with the provisions of lining the final agreement on settlement and cooperation of September 15, 2022. The hearings for the judicial approval process of the settlement proceeded smoothly, and we are now waiting for final verdict. On the Ordinary Shareholders'\ Meeting. On June 12, our Ordinary Shareholders Meeting was convened. I'm pleased to report that the annual report -- Corporate Governance Annual Report, Sustainability Report and the (inaudible) to separate and consolidate the financial statements for 2022 were all approved.

Furthermore, an updated version of our dividend policy has also approved. On recognitions in Health and Safety Management on August 10 and 11, we received a significant recognitions that show our strong commitment to the safety and well-being of our team, a commitment that is not only pivotal to our business but also a top corporate priority. Rimac Seguros honored Aenza with the gold category, the highest recognition in its excellence award for best management of occupational risks within the construction sector.

Additionally, Mapfre recognized our subsidiaries, Cumbra Ingenieria, Cumbra Peru, with the Excellence in Safety Award. Notably, Cumbra Peru achieved the highest score amongst the thousands of Mapfre clients evaluated. These awards further highlight our dedication to upholding the SEG factors at the forefront of our operations.

Now Oscar Pando will present the results for the second quarter of the year. Thank you very much.

Thank you, Andre. Results for second quarter 2023. Revenues. On Slide 8, consolidated revenues reached PEN 1.9 billion, 7.8% lower than the figure reported at the end of second quarter 2022, mainly due to lower production volume in (inaudible) in the Engineering and Construction business made in Cumbra Peru due to (inaudible) project and lower traffic in (inaudible) affected by rains in the North of the country and (inaudible) in line with social process during the first month of the year.

The aforementioned is partially offset by an increase in revenue due to higher oil production in the upstream business and better numbers for social housing units delivered and the sale of industrial land in Almonte for PEN 24 million in the real estate business. Likewise, in the Infrastructure business, UNNA Transporte reported higher revenues due to higher road maintenance execution and so did Line 1 due to tariff indexation.

Gross profit. Consolidated gross profit decreased 19% compared to the second quarter of 2022 as a result of lower profit recorded (inaudible) in Peru and in the (inaudible), Chile, both part of the engineering and construction business units. Also, the 2022 adjustment to the methodology of revenue recognition and associated cost has a negative effect in second quarter 2023.

Additionally, the reduction in gross profit is explained by higher operating costs in Line 1 and Norvial related to higher maintenance and by an increase in maintenance expenses related to a (inaudible) in the upstream business. All the aforementioned partially offset by higher margins related to the sale of lots in Almonte and higher affordable housing deliveries in those (inaudible) both part of Viva business unit.

Operating income, administrative expenses increased by $7.6 million in second quarter 2023, reaching 5.5% of sales compared to the 4.7% of sales at the end of second quarter 2022. The main increase resulted in the real estate business due to higher transaction costs from the sale of lots in Almonte. Regarding other operating expenses, we registered an adjustment of the provision for the (inaudible) Cumbra Peru for PEN 4 million due to the update of tax units and registered tax contingencies for PEN 2.5 million in Cumbra, all these partially offset by income in a holding for PEN 3 million related to the refund of an insurance policy and the recovery of provisions.

As a result, operating income decreased in second quarter 2023 with a margin of 6%. Financial expenses. In second quarter 2023, net financial expenses decreased by 62.7%, mainly due to interest payments related to the Cumbra (inaudible).

Dollar exchange rate went from PEN 3.83 per dollar in second quarter 2022 to PEN 3.63 per dollar in second quarter 2023. Considering the [net] position of assets and liabilities in dollars, a positive impact on the exchange difference is generated. Consolidated net loss in second quarter 2023 was PEN 23 million, which represents a net loss margin of minus 1.2%.

Adjusted EBITDA decreased by 9.1% compared to that of the same period of 2022 increasing from PEN 291 million to PEN 265 million. Backlog on Slide 13. Consolidated backlog amounted to $2.2 billion, of which $927 million corresponds to recurring business, that is oil and gas segments and the Norvial Concessionaire. This figure represents a variety of total backlog revenues of almost 1.95 years. Debt on Slide 15, consolidated financial liabilities at the end of second quarter 2023 are $484 million breakdown as follows: $36.5 million corresponds to working capital associated to clients' account receivables and leasings for the acquisition of machinery and equipment.

$257 million correspond to the infrastructure rate finance, $8 million correspond to debt derived from performance bonds rented to secure Concessionaire [Nazca-Cuzco]. Obligations under the concession contract, which was executed by the provision state by virtue of the arbitration ruling issued in October 2022, which declared the capacity of the Concessionaire. $123 million corresponds to the bridge loan with (inaudible) in April 2022.

$42.5 million corresponds to the sale of 48.8% of the shares of Norvial, according to International Financial Reporting Standards Committee. This operation includes the transfer of political rights to (inaudible) with an option to repurchase the shares. Finally, $17 million corresponds to leases according to International Financial Reporting Standards 16. Thank you for your attention, and we can start now with the Q&A session.

(Operator Instructions)

This concludes our question-and-answer session as well as today's presentation. Thank you for your participation. You may now disconnect your lines, and have a nice day.