Aenza S.A.A.(AENZ) - 2023 Q4 - Annual Report

Financial Performance - The company reported a profit of $38.0 million for the year ended December 31, 2023, compared to a loss of $362.1 million in 2022 [363]. - Adjusted EBITDA for 2023 was $196.6 million, a significant increase from $173.3 million in 2022, reflecting improved operational performance [363]. - Financial expenses decreased to $51.2 million in 2023 from $190.0 million in 2022, indicating better cost management [363]. - Total revenues decreased by 2.4%, or S/103.6 million, from S/4,405.1 million in 2022 to S/4,301.5 million in 2023 [380]. - Profit for the year attributable to owners of the Company decreased by 118.8%, from S/84.6 million in 2022 to S/22.8 million in 2023 [380]. - Operating profit decreased significantly by 8,878.1%, from S/489.9 million in 2022 to S/131.9 million in 2023 [380]. - Profit before income tax decreased by 246.0%, from S/336.7 million in 2022 to S/90.7 million in 2023 [380]. - Gross profit increased by 39.2%, or S/196.0 million, from S/499.5 million in 2022 to S/695.6 million in 2023, with a gross margin of 16.2% compared to 11.3% in 2022 [384]. - Other income turned positive with a net increase of S/304.3 million, from S/290.6 million in expenses in 2022 to S/13.7 million in income in 2023 [386]. - Operating profit for 2023 was S/489.9 million, compared to an operating loss of S/5.6 million in 2022, resulting in an operating margin of 11.4% [387]. Revenue Breakdown - In the Energy segment, revenues increased by 7.7% due to higher oil production, reaching S/682.7 million in 2023 compared to S/633.8 million in 2022 [381]. - Infrastructure segment revenues increased slightly by 0.7%, totaling S/1,015.0 million in 2023, up from S/1,007.7 million in 2022 [381]. - Real Estate segment revenues decreased by 40.1%, from S/367.3 million in 2022 to S/220.0 million in 2023 [381]. - Engineering and Construction segment revenues decreased by 1.0%, totaling S/2,653.5 million in 2023 compared to S/2,679.2 million in 2022 [381]. - Energy segment revenues rose by 7.7%, from S/633.8 million in 2022 to S/682.7 million in 2023, driven by higher oil production despite a decrease in average oil prices [401]. - Real Estate revenues fell by 40.1%, from S/367.3 million in 2022 to S/220.0 million in 2023, primarily due to fewer housing units delivered [402]. Cost Management - Labor costs represented 26.8% of cost of sales and 57.7% of administrative expenses in 2023, while third-party services accounted for 35.1% of cost of sales [347]. - Total cost of sales decreased by 7.7%, or S/299.7 million, from S/3,905.6 million in 2022 to S/3,605.9 million in 2023 [383]. - Administrative expenses increased by 2.3%, totaling S/219.4 million in 2023 compared to S/214.5 million in 2022 [380]. - Income tax expenses for the year were $52.7 million, compared to $195.6 million in 2022, indicating a more favorable tax environment [363]. Operational Efficiency - The company plans to continue focusing on operational efficiency and cost reduction strategies to enhance profitability in the upcoming year [370]. - The Engineering & Construction (E&C) Segment recorded an Adjusted EBITDA of $48.7 million in 2023, recovering from a loss of $30.3 million in 2022 [368]. - The Energy Segment's Adjusted EBITDA was $63.6 million for 2023, up from $184.2 million in 2022, showing resilience despite market fluctuations [366]. - The Real Estate Segment reported an Adjusted EBITDA of $14.7 million in 2023, a decline from $137.7 million in 2022, reflecting a downturn in this sector [367]. Market and Economic Conditions - The nominal GDP of Peru is projected to reach $268.0 billion in 2023, up from $244.8 billion in 2022, reflecting a growth rate of approximately 9.0% [430]. - Mining exports from Peru amounted to $44.0 billion in 2023, representing 62.8% of total Peruvian exports [433]. - The construction industry's nominal GDP in Peru is estimated at $9.6 billion, accounting for 3.6% of the country's nominal GDP in 2023 [432]. - The average real GDP growth rate in Peru for 2021 was 13.6%, while the projected growth rate for 2023 is -0.6% [430]. - Foreign direct investment growth rate in Peru was 65.0% in 2023, following a significant increase from 976.6% in 2021 [430]. - The unemployment rate in Peru decreased to 6.4% in 2023, down from 7.1% in 2022 [430]. Corporate Governance and Management - The company has appointed new executive officers in 2023, including Renzo Ricardo Temoche Romero as VP of Corporate Control and Financial Planning and Cristian Restrepo Hernandez as VP of Corporate Finance [448]. - Total compensation paid to the Board of Directors in 2023 amounted to S/1.77 million, while total compensation for executive officers was S/26.27 million [455]. - The company has established a mandatory profit-sharing provision of 5% of total annual taxable income to be distributed among all employees [457]. - The Executive Commission evaluates the strategic plan, annual budget, and annual investment plan at the management level [454]. - The Audit and Compliance Committee is responsible for ensuring the integrity of financial statements and overseeing the financial reporting process [459]. Human Resources and Safety - As of December 31, 2023, the company had a total of 12,787 full-time employees, including 5,002 manual laborers, with 26% of employees working outside Peru [468]. - The company achieved an accident incidence rate of 0.19 accidents per 200,000 hours worked in 2023, reflecting a significant reduction compared to the previous year [470]. - The company invested a total of US$ 45,000 in training, providing more than 30 hours of training per capita to its workers [470]. - The company has implemented nine new human management policies to improve the worker life cycle within the organization [470]. - The company’s occupational health and safety management system is certified by the ISO 45001 standard, and it also holds ISO 14001 certifications for environmental management [470].