Cementos Argos reports 1Q16 EBITDA up 38%
Cementos Argos reports that 1Q16 volumes across all regional divisions represent healthy dynamics in all the markets where the company is present, especially in the US, where cement dispatches increased 47 per cent. For the 1Q16, cement volume increased 6.4 per cent to 3.5Mt. Ready-mix sales reached 2.8Mm3, an increase of 10.5 per cent.
“The obtained results augur us a good performance for the 2016 and confirm us that the geographic diversification, expansion and consolidation of our businesses, the flexibility of our operations and the constant pursuit of the operational excellence of the company, will enable us to continue on a path of growth that drives the progress of the countries and the welfare of the communities of the territories where we operate”. Juan Esteban Calle, CEO of Cementos Argos.
Colombian dispatched cement volumes in 1Q16 fell 17 per cent, reaching a total of 1.2Mt. Due to the different competitive dynamics of the market, Argos had lower volume growth in the central region. Nevertheless, the company remains optimistic regarding the outlook for this market, which is expected to demand cement with the start-up of the 4G road infrastructure projects and Bogota’s infrastructure plan proposed by the newly-elected major, Enrique Peñalosa.
In the ready-mix concrete business, Argos dispatched 801,000m3, up 0.7 per cent, as a result of an increase of residential construction offset by deceleration of civil works.
Revenues increased by 1.2 per cent, EBITDA by 6.8 per cent and EBITDA margin by 160bps. These results were due to price improvements and the results of our organisational excellence programme. Firstly, the Rio Claro plant is now fully operational and so is the Cartagena’s dispatch centre. Secondly, better efficiencies have been achieved such as the reduction by five per cent of the caloric intake, stabilisation of the reliability factor in Cartagena and Rio Claro above 96 per cent and the increase of the use of additives for the production of cement.
USA regional division
Cement dispatches increased by 47.3 per cent, reaching levels of 935,000t during the quarter. This growth is due to a pent-up demand after difficult weather during the past year. The states in which Argos is present once again surpassed the national growth cement dispatch average (15 per cent) with a 28 per cent average increase, led by the Carolinas with over 40 per cent, Alabama 36 per cent and Georgia 25 per cent.
In the ready-mix business, more than 1.9Mm3 were sold, increasing 16.7 per cent when compared to 1Q15. This due to a better weather reflected in 75 per cent of good days/ business days in the quarter.
Argos US registered revenues for US$335m during 1Q16, increasing by 26.9 per cent, reflecting the US come back. During the 1Q16, EBITDA increased by 140.3 per cent, reaching US$34m, supported on operational leverage. The EBITDA margin for the period was 10 per cent, which represents approximately 479 additional basis points when compared to the 1Q15.
Caribbean and Central American regional division
Argos sold nearly 1,281,000t of cement in 1Q16 increasing by 14.4 per cent, driven mainly by the performance of the Eastern Caribbean operations and the results of the trading and exports business.
In Panama the company continues to increase our market share, in a country with a slow market recovery explained by delay in starting up of public projects and the slowing of the construction permits granting. Argos expect a positive perspective for year-end 2016 in this country, driven by the Government investments of approximately US$3.5bn to be invested in infrastructure and social housing.
Volumes for the ready-mix concrete business reached levels of 102,000m3, 9.3 per cent below those in 1Q15.
Argos registered revenues of US$139m, increasing by 3.7 per cent when compared to the same period of 2015. The EBITDA generated in 2016 by this regional division reached US$49m, which represent an increase of 11.3 per cent. EBITDA margin for the period was 35 per cent, 241.7 bps above the result obtained during 2015, which proofs a high return on capital and the efficient logistical interconnections in the region.
The results for the year reflect the healthy performance of the Honduras operation and the achievements obtained through Argos' organisational excellence programme such as an increase in 10 per cent of the reliability factor, a savings of four per cent in the energy consumption, improvements of 300bps in the clinker-to-cement ratio and the increment in 60bps in the use of alternative fuels. Additionally in Panama, Argos’ operational costs dropped by two per cent and our clinker-to-cement ratio improved by 400bps.
As of 31 March 2016, Cementos Argos’ consolidated financial debt rose to US$1853m, of which 39 per cent was denominated in Colombian pesos and 61 per cent in US dollars. The average annual cost of debt in Colombian pesos closed at 11.3 per cent, while in US dollars was of 2.7 per cent.
