Argos ONE

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Cementos Argos’ volumes, revenues and EBITDA maintain a solid performance during the third quarter of 2021

  • At the end of the third quarter, the company recorded dispatches of 12.9 million tons of cement and 5.9 million cubic meters of concrete on a consolidated and accumulated basis *.
  • Consolidated revenues reached COP 7.3 trillion, which represents 9 % growth, and the accumulated operational EBITDA was COP 1.44 trillion, with an increase of 18 % compared to 2020.
  • During the third quarter, the company reaffirmed its commitment to climate change with challenging goals and officially launched the cross-listing of its shares in the Chilean market.
  • Thanks to the company’s solid operating results at the end of the third quarter of 2021, Argos maintained its leverage ratio, measured as net debt to EBITDA at 3.1 times. Significantly lower than 4.54 times at the start of the year.

 

Argos, a Grupo Argos cement company, recorded a strong volume performance during the third quarter of 2021, leveraged by successful commercial strategy and the positive market conditions present in all the regions.

 

Consolidated cement dispatches year to date show a 21.5 % growth, thus reaching 12.9 million tons, while concrete volumes reached 5.9 million cubic meters, an increase of 0,6 % *. Notably, this quarter’s dispatches show an increase of 11.9 % in cement and 5.7 % in concrete. This increase is mainly due to the signs of economic recovery, the strategic location of the assets and the company’s logistics network that allows connecting operations from the United States and the Caribbean with the Cartagena Plant.

 

On a consolidated and accumulated basis, Cementos Argos’ revenues were COP 7.3 trillion, a  9 % increase compared to 2020. Moreover, EBITDA ** stood at COP 1.44 trillion, with an 18.1 % growth.

 

«The results during the third quarter show the resilience, effort, social value creation, and the impulse towards economic reactivation on behalf of more than 7,200 Argos employees. We remain optimistic about performance and opportunities in the short, medium and long term. We are convinced that through sustainable and innovative initiatives we will strengthen the financial flexibility and competitiveness of the company while promoting our purpose of contributing to building dreams of housing and infrastructure to consolidate prosperous and inclusive communities in all the territories where we are present.”

Juan Esteban Calle, Cementos Argos CEO.

 

During the third quarter, the cement company reassured its commitment to society to face climate change with challenging goals: reduce CO2 emissions by 29 % in its cement operations by 2030 and offer carbon-neutral concrete by 2050, in accordance with the climate ambition Net Zero of the Global Cement and Concrete Association.

 

Furthermore, during the term, Argos attended the virtual bell-ringing ceremony of the Santiago Stock Exchange, where the cross-listing of the company’s shares in the Chilean market was officially launched as a result of the agreement between the Colombian Stock Exchange and the Santiago Stock Exchange.

 

At the end of September, financial leverage, reflected by the net debt / EBITDA plus dividends indicator, remained stable at 3.1 times, the lowest level since 2013.

 

Performance by regions:

 

United States of America:

 

The consolidated cement shipments * recorded a 7.6 % growth, while concrete dispatches were 6.9 % lower. EBITDA ** closed at 191 million dollars, a 2.1 % increase.

 

Amid challenging weather conditions and rising inflation costs, mainly in fuels, energy and freights, the macroeconomic context of the region remains solid. The dynamics of the residential segment remained stable, as evidenced by the increase of housing construction permits during the quarter. For its part, in the commercial segment, it is highlighted that the Architecture Billings Index (ABI), an economic indicator for nonresidential construction activity, stood at 56.6 points in September, one of the highest scores in 2021.

 

It is worth noting that the bipartisan agreement for US $1.2 trillion was approved on Friday, November 5, which includes US $550 billion in infrastructure investments.

 

Likewise, it is worth mentioning that during the term Argos began to participate as a strategic ally in the construction of the Doosan Bobcat compact equipment manufacturing project, for which it expects to deliver about 17,000 m3 of concrete. Along these same lines, the company was recently awarded a supply contract for around 4,000 m3 of concrete for the new Cinemark cinema in Jacksonville.

 

Colombia:

 

During the quarter, the industry experienced a significant recovery in demand, reaching the highest quarterly shipments so far in 2021. Year to date, cement volumes grew 29.6 % compared to 2020, driven by the positive dynamics of the retail segment that continues to deliver positive results supported by self-construction. Concrete sales increased 18.7 %, leveraged by a better performance in formal construction.

 

The consolidated EBITDA at the end of September reached COP 382 billion, 40.9 % higher compared to the same period of 2020.

 

Regarding the market dynamics, sales in units of Social housing and Non-Social housing so far this year have grown by 48 % and 47 %, respectively. Furthermore, housing starts registered a historical monthly figure in July, which anticipates a positive outlook in terms of construction materials consumption.

 

 

In infrastructure, it should be noted that Argos was selected as a strategic supplier in the construction of the Bogota Metro Patio Taller, where it will dispatch approximately 100,000 m3 of concrete over the next 14 months. Likewise, the construction of the second module of the Guillermo Gaviria Tunnel will supply nearly 200,000 m3. These projects, the continuation of 4G, the start of 5G and other urban projects reassure that the dynamics of the segment will continue to be key in strengthening the region’s results.

 

 

Caribbean and Central America:

 

Thanks to the positive performance of exports to the United States and trading in general, accumulated cement shipments grew 32.1 %. On the other hand, the volumes of concrete in the first nine months of the year show a 60.2 % growth.

 

So far this year, EBITDA has accumulated 117 million dollars, a figure 32.4 % higher than the same quarter in 2020.

 

Regarding the market dynamics, we highlight the solid growth of residential and commercial construction in Honduras, the 34 % growth of remittances in the Dominican Republic, and the positive signs of recovery in Panama, driven by the behavior of the housing segment with a subsidized rate. Likewise, in this country, the start of the construction stage of the third line of the Metro was announced.  

 

In French Guiana, where there was an increase in cement shipments of 6.5 % compared to the same period in 2020, the recent inauguration of the Ariane 6 space launch pad, a project built by the French company Eiffage, stands out, where the cement company dispatched about 54,500 tons of three different types of cement with high levels of strength.

 

Argos maintains a positive outlook on this market due to the solid conditions associated with infrastructure programs, remittances, and local recovery plans.

 

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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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