Loma Negra reports 2Q18 net revenues up 37%
Loma Negra reports its 2Q18 net revenue increased 37.2 per cent to ARS4.757bn (US$169.4m) in 2Q18, from ARS3.467bn in the comparable quarter last year.
Cement, masonry and lime revenues in Argentina were up 33.4 per cent YoY, to ARS3.503bn despite volumes remaining almost flat. Cement revenues in Paraguay increased 49.2 per cent, reaching ARS369m in the quarter as the 2.4 per cent YoY decline in volume was more than offset by Paraguayan guarani appreciation against the Argentine peso and better local pricing.
The challenging macro environment in 2Q18 prevented sales volumes of cement, masonry and lime in Argentina to grow, remaining almost flat YoY at 1.49Mt. Sales volumes in Paraguay fell 2.4 per cent in the period to 0.13Mt, mainly due to the high utilisation rate and the lower inventory levels compared to the prior year. As a result, consolidated total sales volumes of cement, masonry and lime for the quarter decreased 0.7 per cent YoY to 1.61Mt.
Consolidated Adjusted EBITDA rose 26.9 per cent YoY to ARS1.153bn (US$41m), mainly driven by the 36.6 per cent increase in Adjusted EBITDA from the Cement, masonry, and lime segment in Argentina to ARS982m.
Sergio Faifman, Loma Negra's CEO, said: "Our core business, cement in Argentina, continued to deliver a solid performance, posting both revenue growth and EBITDA margin expansion despite the current challenging macroeconomic environment in the country. This was achieved despite relatively flat volumes year-on-year, as we continue with our strategy of balancing profitability and market position. Sustained growth in concrete volume demand, by contrast, was supported by ongoing implementation of public infrastructure projects in our key markets."
"Looking ahead, we remain cautiously optimistic with the outlook of the cement demand in Argentina. Despite the potential impact of an adverse macro environment in the second half of the year, and given current market conditions, we believe the industry could reach similar record volumes achieved last year."
Concrete
Concrete revenues rose 80.3 per cent YoY to ARS790m driven by volume growth and higher prices. In addition, railroad revenues rose 24.9 per cent to ARS485m, slightly below inflation mainly reflecting lower transported volumes, partially compensated by higher prices.
Concrete volumes in Argentina, increased 23.7 per cent YoY to 0.25Mm3 mainly driven by a good progress in public infrastructure works, principally in the metropolitan area of Buenos Aires.
Aggregates
Aggregates revenues were up six per cent to ARS69m during the period, reflecting a 7.4 per cent decline in volumes and a significantly higher share of FOB sales in the quarter. In 2Q18 aggregate volumes declined 7.4 per cent YoY to 0.25Mta.
Cost of sales increased 40.9 per cent YoY reaching ARS3.426bn in 2Q18. In cement, masonry and lime in Argentina cost of sales increased 31.7 per cent YoY, principally reflecting the impact of the peso depreciation on the company’s cost structure, mainly in thermal and electricity costs.
Gross profit rose 28.5 per cent YoY to ARS1.331bn in the second quarter of 2018 from ARS1.035bn in same quarter of last year.
Expansion project
Meanwhile, Loma Negra is moving ahead with the capital expenditure at its L'Amalí plant, which will add 2.7Mta and drive higher profitability. This expansion involves a total capital expenditure of approximately US$350m, and is expected to be completed early 2020. Basic engineering of the new plant and study of soil in situ was completed in 4Q17.
