Cementos Argos readies itself for 'vibrant' US market growth
With US demand recovery on a roll, Cementos Argos is readying itself for 'vibrant' growth in the years ahead with the group having consolidated its presence in nine strategic states.
Last year, Argos recorded historic overall results in terms of both income and EBITDA, which rose above US$2.9m and US$534m (growth of 17 and eight per cent, respectively). The company reported unprecedented consolidated figures in terms of cement and concrete sales volumes, dispatching 12.5Mt of cement and 11Mm3 of concrete, and it increased its net profit by about 59 per cent.
Globally speaking, the company is a relevant player in the cement and concrete business in the Americas, with a direct presence in 12 countries and exports to more than 35 destinations. A total of 56 per cent of its cement sales and 69 per cent of its concrete sales stem from operations outside Colombia.
US expectations
The company’s performance in the United States is especially noteworthy, where, after having acquired operations in Florida for a total amount of US$720m, its installed cement production capacity increased by 107 per cent, and that of concrete by 34 per cent. As a result, Argos became the second largest concrete producer in the country and the second largest cement producer in the southeastern United States. Argos is present in nine strategic US states which together consume 34Mta of cement (three times the level in Colombia) and, according to the Portland Cement Association (PCA), are forecasted to have a cement consumption growth of about 12 per cent on an annual basis.
Based on recent statistics, analysts are predicting a decade of vibrant growth for the North American economy, supported by the reindustrialisation of the country, its self-sufficiency, a drop in energy prices, lower unemployment rates and an increase in consumer confidence.
“We see the next decade as the period in which Argos will see even greater rewards from the largest investments ever made by a Colombian company in the United States, which, jointly, reached a value of more than US$2.2bn. These investments were consistent with our coherent strategy that was carried out with a great degree of discipline and at an opportune moment by taking advantage of a favourable exchange rate,” explains Jorge Mario Velásquez, Argos’ CEO.
Knock-on benefits
In addition, Argos also consolidated its presence in Central America and the Caribbean, after acquiring new assets in French Guiana for an amount of EUR50m and successfully integrating its operations in Honduras. As this is a region that receives a lot of remittances with currencies that are mostly tied to the dollar and the drop in oil prices further favors it economies (since they are net importers), the countries in the region will benefit by the upward trend of the North American economy.
Domestic developments
Additionally, in Colombia, the company kept its leading position in a dynamic market driven by housing and infrastructure construction. Argos is participating in more than 70 per cent of the infrastructure projects being carried out within the country and in 60 percent of the free homes program being implemented by its national government. In addition, with the announcement of the expansion of its Sogamoso Plant, Argos is well prepared to respond to and capitalize on the country’s growth.
A 'fundamental' year
Mr Velásquez concluded by saying: “2014 was a fundamental year for Argos from many different points of view: it allowed us to integrate newly acquired assets in amount of US$785m, to successfully issue bonds that had a demand that exceeded the offered amount by 2.5 times, to invest more than US$230m in the expansion and modernisation of our business in different countries, to work on innovation, and to record historically high results.”
At the company’s Annual General Meeting, which was held on 20 March 2015, an annual dividend of COP78 per ordinary share and COP231 per preferred share was approved.
