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Argos first quarter 2022 revenues grew 11.2%

  • Ready-mix volumes benefited from solid sales dynamics in all three regions.
  • During the year, Cementos Argos achieved important milestones such as the sale of 23 Ready-Mix plants in the United States, located in non-strategic areas; participation in the initial works of the Bogota Metro and the beginning of operations on its new port in Cartagena.
  • In terms of sustainability, the company received the highest distinction, Gold Class, in the S&P Global Sustainability Yearbook.

 

Argos, a Grupo Argos company, reports a first quarter of 2022 with solid fundamentals and strong demand in its three regions. On a consolidated basis, ready-mix* volume grew 6.3% after reaching 1.9 million cubic meters and while cement* volumes remained stable at 3.9 million metric tons.

During the period, the company generated record revenues of COP2.6 trillion, up 11.2%, and EBITDA* of COP359 billion, 17.8% lower than in the first quarter of 2021, mainly due to an environment of higher inflationary pressures that impacted costs associated with raw materials, energy, freight, and operational maintenance. Nevertheless, the company highlights the very good price performance in all regions, which is expected to mitigate the impact of inflation on costs going forward.

The sale of the last cluster of non-strategic Ready-Mix operations in the United States, which included 23 plants located in suburban and rural markets in North Carolina and Florida, generated a gain on sale of US$21.9 million. Argos also announced its participation as a supplier in the construction of the Bogota Metro “Patio Taller”, which will require close to 100,000 m3 of concrete, and the inauguration of its port in Cartagena, which will triple its current export capacity. During the quarter, the company received the highest distinction, Gold Class, in the S&P Global Sustainability Yearbook.

 

«Demand for our products and solutions remains very healthy and dynamic in all regions. We are operating at full capacity despite a challenging environment due to global supply chain disruptions and inflation in energetics and raw material costs. In this environment, we are focused on maximizing production at our integrated cement plants to meet our customers’ growing needs and on executing a pricing strategy that mitigates the impact of inflation”.
Juan Esteban Calle, CEO of Cementos Argos.

 

The company expects to invest US$200 million in CAPEX by 2022.
 
  • United States:
    The market showed strength during the first quarter, which allowed the company a large improvement in volumes. Cement* shipments grew 7.3% and ready-mix* shipments grew 2.6%. During the period, Argos USA increased its revenues by 3.1% to US$360 million and generated an EBITDA* of US$40 million.

    In this region, the residential segment continues on a positive trend, while the commercial segment shows strong signs of recovery. The company plans to invest more than US$90 million in CAPEX in this country, corresponding to 46% of total capex for 2022.
 
  • Colombia: 
     The regional showed firm demand conditions in the first three months of the year, driven by the retail segment, residential construction and infrastructure projects. Ready-mix volumes grew 13.4% and cement* volumes remained stable. During March, Argos achieved its highest monthly cement dispatches in five years. In addition, exports from Cartagena rose 32% compared to 2021.

    In Colombia, we reported revenues of COP632 billion, up 4.8%, and EBITDA* of COP130 billion.

    The residential segment continues to show positive signs. During the period, sales of social and non-social housing grew 6.4% and 5.5%, respectively, and housing starts grew 11% compared to the first quarter of 2021. In infrastructure, Argos remains optimistic due to positive progress in the 4G Projects, the Bogotá Metro and Puerto Antioquia.
 
  • Caribbean and Central America:
    Ready-mix volumes grew 11.3%, while cement* volumes decreased 11%, mainly due to operational difficulties in Haiti and the Dominican Republic and the government transition in Honduras. Revenues increased 3.4%, with an EBITDA of US$29 million.

    In the region, the industrial segment is expected to perform better in the medium term, due to the progress in some infrastructure projects in Panama and the 22% annual increase in remittances in Honduras, as well as solid demand conditions in the Dominican Republic.

 

*  Adjusted ready-mix volumes for 1Q21 exclude the 208,000 m3 sold in Dallas that were divested in 2Q21.
*  Cement volumes exclude since 3Q21 the product purchased from third parties used to supply the ready-mix operations in Texas. For comparability purposes, 1Q21 adjusted figure excludes 133,000 metric tons of cement purchased from third parties.
*  Adjusted EBITDA excludes: i) For 1Q22 an income of COP 85.7 billion from the gain on sale of the concrete divestment, equivalent to USD 21.9 million, ii)
*  For 1Q21, COP 8.0 million generated by the Dallas operation, equivalent to USD 2.3 million.
*  Adjusted EBITDA for Colombia includes for 1Q21 COP 13.4 million generated by exports.
*  Adjusted EBITDA for CCA excludes for 1Q21 US$3.8 million generated by exports.
*  As of 2022, the export division previously reported in the CCA region will be reported in Colombia.
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PIEDAD MONSALVE

Gerente de Comunicaciones
pmonsalve@argos.com.co
(57 4) 3198700

RAQUEL YEPES

Directora de Comunicaciones
ryepess@argos.com.co
(57 4) 3198700 | Extensión: 64318
313 791 6901

Atmospheric emissions

We are committed to reducing our emissions through actions that achieve more efficient processes and the implementation of abatement measures, contributing to good air quality in the places where we operate.  Our cement-, concrete- and aggregate-production processes generate punctual and scattered particulate matter (PM) emissions, as well as emissions of sulfur oxides (SO2) and nitrogen oxides (NOx) in the clinkering furnaces of the cement plants.

  • For society:  To contribute to mitigating the impact on air quality in the areas where we operate, acting responsibly and promoting relationships of trust with our Stakeholders.

 

  • For the company:  To develop more efficient processes that allow us to reduce our atmospheric emissions and contribute to responsible production, complying with local regulations in the countries where we operate and – in some cases – going beyond compliance with said regulations, contributing to the profitability of the business and preparing to face future challenges.

The “Emissions” pillar of our Environmental Strategy focuses on: Working on the adequate measurement, control and reduction of SO2, NOx and particulate-material (PM) emissions generated by our production processes in the cement business and on the prevention and mitigation of our dispersed emissions of particulate material (dust), originated mainly by the activities of transportation, transfer, unloading and storage of materials in the cement, concrete and aggregate processes. The foregoing, through operational control, optimization and renewal of emission-control systems to achieve continuous improvement.

Industry positioning

We position ourselves as strategic allies for the development of the territories where we are present, directly and through the empowerment of our value chain.  We do it through the construction of housing and sustainable infrastructure that enables the closing of socioeconomic gaps, the generation of employment, the improvement of the quality of life and the reduction of the impacts generated.

  • For society:  To sustainably respond to the growing demand for housing and infrastructure of the world population with the aim of improving people’s quality of life, interconnecting regions and developing innovative solutions. 

 

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    For the company:  To be strategic allies of the actors in our value chain in order to maintain the Company’s leadership in the market, ensure its competitiveness over time and increase the generation of sustainable value.

We are committed to the role we have as a Company in the achievement of the 2030 Agenda goals, the consolidation of territorial development plans where we operate, and the economic reactivation of the countries affected by the pandemic. Therefore, we focus our efforts in the development of sustainable housing and infrastructure projects that contribute to closing socioeconomic gaps, generating employment under safe conditions, environmental protection, and investment in improving people’s health systems and quality of life. 

Our work unfolds in three large lines:

 

Cities for everyone:

 

With nearly 54% of the world  population living in urban areas, the pandemic made inequality of those who live in the cities of the world

manifest. Nearly 90% of the COVID-19 cases are concentrated in the urban

centers that have, among others, challenges associated with access to basic services and decent housing conditions. For this reason, we work together with our value chain to develop projects that benefit the lessfavored population, facilitate access to housing, and promote development in

the areas of influence.

 

Interconnected cities

 

The need to connect urban areas with rural areas to expand the coverage

of basic services, such as health, has been a priority of developing countries

since before the pandemic. Therefore, during 2020, we continued working on creating innovative solutions that allow us to be present in the large projects of the countries and territories where we are present.

 

Intelligent cities

 

In recent years, the acuteness of the effects of climate change became the

risk of greatest impact to the world. Therefore, in the global stage, a need

has grown to transition to a low-carbon economy, an opportunity that becomes more relevant amid post-pandemic recovery scenarios and the effort we are making as a Company to generate new business models that respond to environmental and social challenges. For this reason, our Climate-Change Strategy includes actions aimed at mitigating the impacts associated with our productive processes, adapting our operating model and innovating from the identification of optimization opportunities.

Supplier management

Supplier management is a fundamental pillar of our Supply Chain Strategy; it seeks to build and strengthen relationships with strategic allies who have the ability to contribute to the Company in terms of efficiency, productivity, customer service and innovation.  For this reason, we carefully select our suppliers, transfer knowledge to promote their development, promote good practices and recognize those who are an example of sustainable, innovative, safe and responsible management.

  • For society:  To develop our suppliers, promote transparent practices and responsible conduct, to improve the productivity and competitiveness of our society and support the construction of a better future.

 

  • For the company:  To seek to add value throughout the Company’s supply chain, from the purchase of goods and services to the delivery of products to clients.  Through the mitigation of risks and potentiation of opportunities, the implementation of good contracting practices and service excellence, we create relationships of trust and turn suppliers into business allies.

Our management is divided into five stages:

  1. Identification: We determine the goods and services required for our operation and the category to which they belong, according to our Category Tree. This groups our suppliers into macro-categories which – in turn – are subdivided into two more specific levels.
  2. Pre-Selection: We validate the suitability of suppliers through due diligence and review aspects of sustainability and financial health to ensure long-term relationships.
  3. Negotiation: We select suppliers with high standards, considering technical, economic, sustainability and service aspects.
  4. Retention and evaluation: We carry out knowledge-transfer processes with those suppliers with growth potential.
    • We characterize our suppliers as critical suppliers or with potential risk in sustainability.
    • We measure the management of critical suppliers through performance evaluations in terms of quality, service, occupational health and safety, having constant feedback and identifying key factors for their development.
    • We apply the Sustainability Index to suppliers with potential sustainability risks, to identify challenges, opportunities, and to develop joint action plans in environmental, economic, social and Human-Rights matters.
    • We implement additional controls and development plans to suppliers belonging to categories where the greatest potential risks have been identified. This is how, for example, we develop road-safety strategies for our logistics suppliers; with mining suppliers, we carry out a more rigorous pre-selection process, and with contractors, we have special controls on occupational health and safety.
    • We have a Transparency Line for Stakeholders to report possible improper actions and to implement the pertinent corrective actions. 
  5. Recognition:  Every two years, through Growing Together (Creciendo Juntos), we recognize the suppliers that have shown outstanding performance in innovation, sustainability, health and safety and development and comprehensiveness.

 

Additionally, we have:

 

Contracting manual: transparent action framework that guides the negotiation and contracting of our suppliers to allow the process to be agile, make use of best practices and carry out adequate risk management.

 

Code of conduct for suppliers: in which we define the principles and behaviors that we expect from our allies in terms of respect for human rights, protection of workers, environmental management, business ethics and responsible business practices.

Ethics and compliance

We are convinced that ethics and integrity are fundamental and non-negotiable; that is why we live by these principles, integrating them into our operations, processes, and strategy, thus generating value responsibly for our business, our Stakeholders, and for society.  Through the Global Governance and Compliance Program, our ethics and business conduct system, we seek to promote that our actions are consistent with the pillars of corporate culture and integrity as the guiding principle of our business activity.

  • For society:  To promote transparent, competitive, and sustainable business environments that strengthen trust and ethics in business, generating positive impacts for the market and society.

 

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    For the company:  To promote that our actions are consistent with the pillars of culture and that integrity is the inspiring principle of all members of the Organization.  This is how we consolidate ourselves as a competitive, reliable company in the eyes of investors and other Stakeholders.

We have voluntarily adopted a self-regulatory framework that confirms our commitment to business ethics as a way to promote transparent practices that contribute to the development of competitive environments. This framework* incorporates mandatory principles of ethics and conduct:

 

 

For the proper implementation and application of these guidelines, the strengthening of the ethical culture, the prevention and control of incorrect actions, our Board of Directors approved the Global Governance and Compliance Program (GGCP, in Spanish). The program structure incorporates international best practices to evaluate compliance programs, such as ISO 37001, ISO 19600 and the United States Department of Justice (DOJ) guidelines. The program has the following scope:

 

 

Likewise, it systematically groups together the activities carried out to promote integrity in the Company’s actions, its employees, and members

of the value chain, which allow the updating and permanent strengthening

of the program. Operating Scheme:

 

Efficiency and productivity

We materialize our Corporate Strategy through actions aimed at the efficient use of resources, the improvement of our financial flexibility and the maximization of income generation and business profitability.  We focus on the application of efficient, safe production processes and circular economy models, on the diversification of energy management models and on the efficient management of the supply chain.

  • For society:  To provide solutions and products that meet the needs of our clients through the responsible, appropriate use of resources and the incorporation of raw materials and alternative energy sources.

 

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    For the company:  To guarantee business sustainability, optimize working capital and capital investments, reduce costs and the level of indebtedness, and mitigate risks regarding the availability of resources necessary for our operation and the emergence of new business realities, environmental requirements and new regulations.

Creamos valor construyendo relaciones sólidas que transforman el futuro de la sociedad

Creamos valor a través de nuestro compromiso con el desarrollo responsable y transparente de nuestras actividades.