Cementos Argos 1Q revenues impacted by Colombia

Cementos Argos posted a 6.1 per cent decline in consolidated revenues for the first three months of the year, citing a challenging first quarter affected mainly by Colombia.

Over 70 per cent of revenues and EBITDA came from operations outside of Colombia. The US continues to be its main market in terms of revenues, cement and ready-mix volumes. For the first time, the Caribbean and Central America group region was the leading contributor to EBITDA accounting for 43 per cent. 

Cement volumes were up by 11.5 per cent YoY driven by US operation and a recovery in market share in Colombia. However, ready-mix concrete volumes fell six per cent, reflecting the importance of its operations in Texas where the Houston market has been affected by oil price dynamics and adverse weather conditions.

US division
In the US cement dispatches rose by 43.4 per cent to 1.3Mt during the quarter, and by 14 per cent excluding the inclusion of the Martinsburg operations acquired from HeidelbergCement. Revenues rose by eight per cent YoY to US$361m while EBITDA was US$32m.

Colombia
In its home market of Colombia, Argos reported a 10.3 per cent increase in volumes to 1.4Mt. Its commercial and pricing strategy enabled the company to significantly recover market share mainly in the central and northern regions. Argos said that, going forward, it remains confident on the outlook for the Colombian market based on the diversified backlog of projects in the housing, commercial and infrastructure sector that it will be supplying. Revenues and EBITDA in 1Q17 were below the company’s expectations, falling to COP599bn (-10.1 per cent) and COP82bn (-59.8 per cent), respectively. The decline was attributed mainly to pricing dynamics.

Caribbean and Central American
Cement volumes in the Caribbean and Central American region declined by 10.7 per cent YoY to 1.14Mt. The contraction was attributed to a fall in exports and trading, down 40.1 per cent. In terms of sales to local markets, sales 8.6 per cent to 67,000t mainly reflecting a 20 per cent increase in Honduras and a two per cent advance in Panama after eliminating the Canal base effect. Volumes in this quarter also reflected Argos’ new acquisition in Puerto Rico. For 2017 Argos expects stable growth in cement and ready-mix driven by public investments in infrastructure of around US$4bn announced by the governments of Honduras and Panama for the construction of roads, bridges, houses, ports, etc.