Argos ONE

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Argos’ first quarter reflects its commitment to contribute to reactivate the economy and creating employment and social value

  • During the quarter, Cementos Argos accomplished important milestones in terms of sustainability, continued to invest in Colombia with the expansion of the Cartagena port and plant, thus incorporating 194 direct and indirect jobs and deepening its support to the value chain of more than 1,700 small and medium-sized suppliers in the country.
  • In the first quarter of 2021, the company showed improvement in results in terms of revenues and EBITDA.
  • Cement shipments were in strong demand in all markets and were lower in comparison based on Colombia, as well as the Caribbean and Central American regions.
  • Concrete volumes were mainly impacted by a slower recovery in Colombia and the Caribbean and Central America and weather conditions in the United States.
  • Decrease in debt and operational performance favored the leverage reduction level. 

 

A QUARTER OF KEY PROGRESS

 

During the first quarter of 2021, the consolidated income was USD 651.6 million and EBITDA was USD 125.1 million. This was thanks to better dynamics in all markets and a lower comparison base in Colombia and the Caribbean and Central America. Cement volumes reached 4.1 million tons, thus representing an increase of 19%. On the other hand, concrete shipments totaled 2 million cubic meters, with a decrease of 4.4%, mainly caused by weather conditions in the United States and a slower recovery of formal construction in Colombia and in Caribbean and Central America countries.

 

Also, Cementos Argos continued to invest in Colombia with the expansion of the port and plant in Cartagena, adding 194 direct and indirect jobs and deepening its support for the chain of more than 1,700 small and medium-sized suppliers in the country.

 

Likewise, at the beginning of the year, the company launched Green Solutions, a portfolio made up of innovative resources, services and products that contribute to the development of more environmentally friendly projects for the environment, materialized a loan for COP 160 billion where the interest rate is based on environmental and social performance and corporate governance (ESG), and updated its climate change strategy, in which it is committed to reducing its CO2 emissions by 29% by 2030 and to offering carbon-neutral concrete by 2050.

 

«We are committed to continue contributing social value to our country; therefore, we continued to invest in Colombia and we are innovating every day to help materialize, hand in hand with our clients, the dreams of housing and better infrastructure for all Colombians. The quarter’s results in terms of sustainability, job creation, commercial dynamics, progress in efficiency and competitiveness programs, cash generation and deleveraging were satisfactory due to the commitment, good spirits, and a sense of transcendence of over 7,200 of our employees”.

Juan Esteban Calle

CEO

 

RESULTS BY REGIONS:

 

United States Region

Revenues remained stable at USD 349 million, while higher efficiencies drove EBITDA to USD 50 million. Cement volumes totaled 1.4 million tons, which means we saw an increase of 3.1% compared to the same term in 2020. These volumes were driven by the positive dynamics of the construction of warehouses and distribution centers, which continue to support the demand of cement. On the other hand, concrete volumes decreased 6.9%. They were impacted especially by a massive winter storm in Texas and an increase of rainy conditions in the Carolinas.

 

 

 

 

Colombia Region

Better volumes and stable prices allowed for an increase of income compared to the same term of last year, which reached USD 169.6 million. This, added to lower maintenance costs drove the increase of the EBITDA, which stood at USD 40.7 million. Cement shipments were 1.2 million tons, with an increase of 19.4 %, thus benefiting from a low comparison base. On the other hand, concrete volumes were 572,000 cubic meters, 3.3 % higher than that of the same quarter of last year, but still lower compared to 2019.

 

In this first quarter, in terms of volume and mass segment, the market continued to recover, maintaining the positive dynamics seen since September 2020. For its part, formal construction continues its path to recovery, driven by an increase in housing starts and stability in the execution of infrastructure projects.

 

Caribbean and Central America Region

An income increase is reported due to higher cement volumes, as well as a USD 41 million EBITDA, higher than the same period of 2020. The dynamics of self-construction and signs of recovery in Panama drove higher cement shipments to 1.4 million tons, 21.4% more. Concrete shipments, meanwhile, decreased 13.7% year-on-year as a result of lower recovery rate in the industrial segment.

 

Regarding the dynamics of the market, a better performance of the industrial segment is estimated in the medium term, due to some plans by local governments to promote economic recovery through infrastructure.

 

“The health and safety of our employees, as well as creating employment and social value, continue to be our highest priorities for 2021. We are convinced that at Argos we are a part of the solution, and we will continue working every day with optimism, empathy and hope to contribute to the more equitable society we all dream of»”, stated Juan Esteban.

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PIEDAD MONSALVE

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

DANIELA VALLE

Directora de Comunicaciones
dvalle@argos.com.co

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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.

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