Argos ONE

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First half of 2023 with concrete progress in SPRINT, Argos’ share price recovery program, and a 26% EBITDA growth

  • The company has successfully executed three of the five pillars of its SPRINT program.
  • In the first half of the year, Argos’ EBITDA grew 26% and sales increase 8%.
  • In all of its regions, the cement company achieved significant increases in EBITDA and revenue.
  • The company started a project to increase its cement production capacity in the Dominican Republic by about 25%.
  • Recently, the company reached an agreement to evaluate viable structures that would allow the supply of aggregates to the Caribbean basin from Costa Rica.

 

In the first half of 2023, Argos, a cement company of the Grupo Argos holding with a history of almost 90 years, reports significant progress in its SPRINT program, which is known as the Share Price Recovery Initiative:

 

  1. Focus on solid operational and financial results with emphasis on profitability. EBITDA increased by 26% at the end of the semester.
  2. Significantly increase dividend distributions for 2023. In addition to the 128 billion pesos that were distributed as dividends in April 317 billion pesos were approved at the Extraordinary Shareholders’ Meeting in June, for a total of 445 billion pesos to be distributed in 2023, which is equivalent to an increase of 15% compared to 2022.
  3. Launch a share repurchase program for a total amount of 250 billion pesos. In an extraordinary meeting, shareholders approved a first phase of 125 billion pesos.
  4. Improve the visibility of the operating value and continue the process for the listing of the US business on the New York Stock Exchange. The company continues its preparations to list the US operations on the NYSE once market conditions are appropriate.
  5. Improve the liquidity of the ordinary share by signing a local market making contract, so that they are once again eligible for repo operations. The company’s shares are eligible for repo operations for the second consecutive quarter and the average daily trading volume increased by 61%.

 

In terms of consolidated financial figures, the company highlights the results of a semester that brought climate challenges in the United States, but in which the successful execution of the pricing strategy, efficient cost management and efforts to consolidate a winning value proposition allowed it to achieve an EBITDA of USD 278 million, with an increase of 26% compared to the first six months of 2022. In terms of consolidated revenue, it obtained USD 1.5 billion, 8% more.

 

In this period, shipments presented a contraction of 2.7% for cement (7.9 million tons) and 6.5% for concrete (3.5 million cubic meters), if compared with the same semester of the previous year, caused, mainly, by a higher number of rainy days in the United States, the slowdown of the housing segment in Colombia and the difficult social and political situation in Haiti.

 

“In the first half of 2023 we achieved relevant milestones that demonstrate our commitment to generating value for our shareholders and other stakeholders. The progress in the execution of SPRINT, the growth of revenue and the expansion of the profitability margins of the businesses in our main markets motivate us to continue working every day in the value generation for all our stakeholders through the participation in housing and infrastructure projects that contribute to improve the quality of life and competitiveness in the 16 countries and territories where we have presence. The strength of our figures, the price dynamics and some improvements in the macroeconomic conditions support a positive perspective for the rest of 2023.”

Juan Esteban Calle, Argos President.

 

United States:

Despite the heavy rains that occurred in the southern part of the United States and operational issues at the Newberry plant in Florida, productivity and pricing improvements allowed Argos to achieve a record EBITDA for the first half in this region, which reached USD 158 million and increased 41% compared to the same period in 2022. Similarly, sales reached USD 860 million, 14% higher than the previous year. Based on this, cement shipments remained steady and concrete shipments decreased by 7.8%.

 

In the country, housing indicators show a recovery trend, and the industrial and infrastructure segments continue to gain momentum, as evidenced by the double-digit growth in public spending on construction recorded during each month of 2023.

 

Colombia:

The EBITDA achieved was USD 72 million, an increase of 7% compared to the same months of 2022, and the revenues totaled USD 318 million, 4% less than the first half of the previous year.

 

With respect to cement volumes, there was a slight decrease of 5.6% during the period. On the other hand, concrete volumes decreased by 5.5%. This decrease was mainly due to a lower market dynamic and the strategy of prioritizing profitability in all of its business lines. On the other hand, cement exports increased by 13.5% thanks to shipments to the United States.

 

The company closely monitors the market dynamics in order to deploy strategic initiatives to adapt to a changing environment. Additionally, it continues to participate in 4G projects that are being developed normally, as well as other relevant works, such as Transmilenio Soacha, Transmilenio Avenida 68, Túnel del Toyo, and Puerto Antioquia, among others.

 

Caribbean and Central America:

The company’s efforts to capitalize on the opportunities in each country allowed it to achieve an ebitda of USD 63 million, an increase of 2.8% over the same period of the previous year, and revenues of USD 286 million, an increase of 3.7% compared to the first half of 2022. Cement shipments decreased by 3.8% while concrete shipments increased by 7.5% compared to the first six months of last year.

 

These results were supported, to a large extent, by a satisfactory recovery in volumes in Panama and a strong dynamic in the Dominican Republic, where the company started a project to expand its cement production capacity by approximately 25%.

 

As a strategic milestone, Argos recently reached an agreement to evaluate viable structures that would enable the supply of aggregates to the Caribbean basin from Costa Rica.

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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.

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

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

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