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Argos reports solid financial performance in the third quarter of 2024, driven by our value generation program “From the mine to the market”.

Argos reports solid financial performance in the third quarter of 2024, driven by our value generation program “From the mine to the market”.

  • At the close of the third quarter of 2024, our EBITDA margin expanded year-to-date 235 basis points, maintaining a growth trend in Colombia, Central America, and the Caribbean and achieving our 2024 guidance of an EBITDA margin above 22%.
  • With the successful execution of our SPRINT 2.0 program, the value of our stock has increased approximately threefold since February 2023, when we launched the first version of SPRINT.
  • With reduced debt and greater financial flexibility, we closed the third quarter of 2024 with a net debt-to-EBITDA ratio of 2.2 times, strengthening our ability to explore growth opportunities in the region.

 

At Argos, we continue to establish ourselves as a highly profitable company focused on creating value for our investors. At the end of the third quarter of 2024, we recorded a year-to-date expansion of 235 basis points in our EBITDA margin, which stands at 22.2%, and reached a leverage level measured by net debt/EBITDA of 2.2 times, enhancing our position to explore new growth opportunities. These results are supported by our value generation program “from the mine to the market,” conceived as a strategic program focused, among other things, on improving the reliability of our plants, developing tools that enable us to control company costs, and being the best option for our customers, all with the ultimate goal of delivering exceptional financial results and creating value for our various stakeholders.

 

On a cumulative basis, we achieved consolidated revenues of 4 trillion pesos and an EBITDA of 887 billion pesos, with an increase of 6.4% compared to the same period last year. The total accumulated volume of cement dispatched at the end of the third quarter stood at 7 million tons, with a decrease of 4.8%, mitigated by operational improvements and cost savings. For cumulative ready-mix dispatches, we reached 2 million cubic meters, with a reduction of 4.6% compared to 2023, attributed to market factors in Colombia but offset by our focus on profitability over volume.

 

Regarding value generation for our shareholders, with the inclusion of our stock in the MSCI and FTSE indices, we successfully achieved all the milestones set for 2024 under our SPRINT 2.0 program, which aims to close the gap between the fundamental and market value of the company. The inclusion of our common stock in these indexes, resulted from the conversion of our common non-voting shares into common shares executed in May, which attracted purchase inflows of 613,000 million pesos into our stock during August and September when the indexes were rebalanced. This represents a milestone not only for our stock but also for the Colombian stock market, which, by having a fourth constituent in the MSCI Emerging Markets Index, moves away from the possibility of being downgraded to a frontier market.

 

The implementation of SPRINT 2.0 achieved concrete benefits such as increased stock liquidity, with a 12x increase in daily trading volume and an improvement of approximately 300% in total shareholder return (TSR) since the launch of the program’s first version last year. We continue to work on designing and executing additional alternatives that will contribute to closing this gap.

 

REGIONAL PERFORMANCE

COLOMBIA


In Colombia, price dynamics have aligned with annual inflation. Despite challenges, including trucker’s protests, we achieved an accumulated EBITDA of 577 billion pesos at the end of the quarter, with an EBITDA margin of 25.9%, expanding by 286 basis points. Accumulated dispatches in Colombia reached 4 million tons of cement and 1.8 million cubic meters of concrete so far this year.

 

CENTRAL AMERICA AND THE CARIBBEAN

In Central America, year-to-date EBITDA at the close of the third quarter stood at 57 million dollars, representing a growth of 3.3%, with an accumulated EBITDA margin of 28.8%, expanding by 141 basis points. Honduras showed outstanding performance, with a 16.4% volume increase during the quarter.

 

For the year so far, in the Caribbean, we recorded a year-to-date EBITDA of 38 million dollars, an increase of 33.4%, and an EBITDA margin of 19.2%, expanding by 491 basis points. Highlights include a 13% volume growth in the Dominican Republic and a 103 basis-point expansion in the EBITDA margin. Additionally, thanks to operational and commercial efficiencies in Puerto Rico, we increased volume by 6.5% and expanded the EBITDA margin by 555 basis points.

“In a challenging context across the markets we operate in, at Cementos Argos, we have worked with determination to adapt and continue generating significant value for our shareholders. Our strategic initiatives have proven effective this quarter, allowing us to expand margins and strengthen our financial position. We remain committed to maintaining a disciplined focus on profitability and exploring regional growth opportunities. Our objective is clear: to build a resilient company ready to face any challenge while generating a positive and sustainable impact for our shareholders, customers and communities.”
Juan Esteban Calle, CEO of Cementos Argos.

OUTLOOK: COMMITMENT TO VALUE CREATION AND REGIONAL EXPANSION

We remain committed to creating value for our shareholders, leveraging increased financial flexibility and a strong position in Latin America. The outlook for 2025 is encouraging, driven by an estimated GDP growth for Colombia of 2.4%, surpassing the 2024 estimate by 1.3 points. The stability of costs and declining inflation in the region will support margin expansion, while reduced mortgage and interest rates will boost consumer activity and housing sales in Colombia, stimulating cement demand.

[1] Source: International Monetary Fund

For more information, please contact:
Piedad Monsalve, Communications and Reputation Senior Director  I pmonsalve@argos.com.co

Indira Díaz, Investor Relations Manager | idiaz@argos.com.co

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PIEDAD MONSALVE

Gerente de Reputación y Comunicaciones Corporativas
pmonsalve@argos.com.co

______________________

RAQUEL YEPES

Comunicaciones para Colombia
ryepess@argos.com.co

NATHALIA RIOS
Comunicaciones para Centroamérica nathalia.rios@argos.com.co
DANIELA VALLE

Comunicaciones para Caribe 
dvalle@argos.com.co

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Sala de prensa

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.

  • 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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