Cementos Argos reports all time-high quarterly revenues: 2,9 billion pesos
- Ready-mix volumes were favored by solid sales dynamics, especially in the United States and
- Record revenues were mainly leveraged by the company’s commercial strategy and by the
- Argos began a pilot test for the use of calcined clay in the USA, which reafirms its commitment
to reducing emissions.
Argos, the cement company of Grupo Argos, presented its quarterly results, highlighting record revenues and strong demand for cement and ready-mix, mainly in the United States and Colombia, as well as stable operating results in an environment of high-cost inflation thanks to the success of its commercial strategyin all geographies, the flexibility of its fuel matrix and the partial hedging of fuel prices.
From April to June, the cement company generated revenues for 2.9 trillion pesos, 15.3% higher compared to the same months of the previous year. Also, it obtained an adjusted EBITDA* of close to COP 525 billion, 2.6% higher than the second quarter of 2021. Net income*** decreased compared to 2021 due to non-recurring operations of asset sales that were reflected in the results of the second quarter of 2021.
It is noteworthy that the adjusted volume* of Ready-Mix in the period rose 13.4% and reached 1.9 million cubic meters, while the adjusted volume of cement* stood at 4.2 million tons, representing a comparable growth of 6.2% if the trading business is excluded and a decrease of 4% in general.
In line with its commitment to sustainability and, specifically, to the reduction of emissions, the company began a pilot test for the use of calcined clay in the United States and expects to reach production of three million tons of clay per year in all of its geographies by 2030, which translates into the production of green cement and concrete.
«We are convinced of the great opportunity that lies ahead to lead the industry in sustainability and generate greater value for our shareholders and all stakeholders. The calcined clay pilot that we are starting in the USA is another important milestone in our roadmap to produce carbon-neutral concrete by 2050. The results of the second quarter were very positive both in terms of revenue growth and volumes; driven, mainly, by the solidity of demand in the United States and the good dynamics of the Colombian economy amidst a challenging situation of high inflation and increase in interest rates».
Juan Esteban Calle, CEO.
The company reafirms its consolidated EBITDA guidance for the year between 2.05 and 2.15 trillion pesos for the end of 2022, as well as a return on capital of around 10% for the same period.
Results Per Region
USA: During the second quarter, revenues in this country were USD 416 million, 7.5% higher than those registered in the same months of 2021. Adjusted EBITDA*, remained stable at USD 75 million, results achieved in part by the USD 11 million in savings derived from the fuels hedging strategy. It is worth noting that, in June, Argos achieved the highest monthly EBITDA recorded to date since the company has been present
in the country.
Regarding adjusted volumes, the company experienced strong demand across most of its operations. Therefore, dispatches of ready-mix rose 6.4% and totaled 1.2 million cubic meters, as did cement dispatches, which also increased 6.4% and totaled 1.7 million tons.
As for the market, positive conditions continue in the residential and commercial segments. Argos continues to monitor the evolution of
macroeconomic variables and their possible impact on operations, although it remains optimistic in the medium and long term regarding the already approved bipartisan infrastructure bill, which will translate into greater demand in the medium and long term.
Colombia: The strong market dynamics continued during the second quarter of the year, supported by the retail segment, residential construction, and infrastructure projects. In the country, Argos’ revenues grew 27.1%, reaching 678 billion pesos, and adjusted EBITDA** increased 12.7%, totaling COP 136 billion.
Continuing with the positive performance, concrete sales rose 25.1% and reached 656 thousand cubic meters, cement sales increased 13.3%, for a total of 1.5 million tons shipped from April to June.
In the country, housing sales and the start of residential projects continue to be a support of the market. In terms of infrastructure, projects such as the Bogotá Metro and 5G will bring significant demand in the coming years.
CCA: In the second quarter, revenues were USD 138 million, while adjusted EBITDA** closed at USD 32 million, 18.8% below the same period of the previous year, affected by the combination of lower volumes in Honduras and Haiti and the already known inflationary pressures.
In this region, shipments of concrete were positive, increasing 58.9% and stood at 71 thousand cubic meters. For its part, cement volumes reached 1 million tons, with an improvement in those of the local market with respect to the first quarter of the year and a lower dynamic on the trading business, which resulted in a decrease in shipments of 30% cement.
If this line is excluded, cement volumes fall 4.7%. Regarding these markets, the company remains cautiously
* Consolidated Results and US Region: Adjusted EBITDA excludes: i) For 2Q22 a non-operational expense related to the listing process for COP 16.1 billion, equivalent to USD 4.1 million, ii) For 2Q21 EBITDA excludes COP 174 billion of the gain on sale of the Dallas divestiture, equivalent to USD 48.1 million, COP 1.5 billion generated by the Dallas operation, equivalent to USD 426 thousand, and COP 8.2 billion generated by the divested RMC operations in FL and NC, equivalent to USD 2.3 million.
Adjusted EBITDA Margin excludes: i) For 2Q22 a non-operational expense related to the listing process for COP 16.1 billion, equivalent to USD 4.1 million, ii) For 2Q21 EBITDA excludes COP 174 billion of the gain on sale of the Dallas divestiture, equivalent to USD 48.1 million.
Adjusted Ready-mix volumes for 2Q21 exclude 141k m3 sold by the divested Dallas operations and 115k m3 sold by the operations in FL and NC divested on 1Q22.
Cement volumes exclude since 3Q21 the product bought to third parties used to supply Argos’ operations of RMC in the US, particularly in Texas, to reflect better the degree of integrations of the operations.
For purposes of comparability, the adjusted figure for 2Q21 excludes 100k tons of cement purchased from third parties.
**Colombia and CCA Regions: Starting 2022, the exports division that was previously reported on the CCA region will be reported in the Colombian region. Total cement represents local market and export volumes. Adjusted EBITDA and EBITDA Margin include for 2Q21 COP 15.3 billion generated by the export division and exclude for CCA UDS 4.1 million generated by the export business.
***Net income for the second quarter of 2021 includes non-recurring income of 77 billion pesos associated with the divestment of Dallas