Argos (Grupo Argos) delivered satisfactory results during the third quarter, amid the COVID-19 pandemic. The company reported an improvement in EBITDA despite the impact on volumes mainly caused by hurricanes and heavy rains in the USA.
During the period, consolidated shipments of cement and concrete registered a decrease of 8.4 per cent and 19.5 per cent, respectively, and of 12.7 per cent and 16.5 per cent compared to 3Q19. This decline was offset thanks to the successful execution of the RESET programme, which allowed the company to achieve significant optimisations in costs and expenses, accompanied by better prices in Colombia and the USA, says Argos.
Revenues from July to September were COP2503bn (US$688.2m), with a reduction of 5.6 per cent, and with 9M20 revenues at COP6679bn, representing a contraction of five per cent.
On the other hand, the consolidated EBITDA for the quarter was COP479bn and registered a notable increase of 9.5 per cent, a milestone reached to a great extent by the growing participation of the company in the US market, the recovery of volumes in the Caribbean and Central America, and cost and expense efficiencies implemented throughout the company. Cumulatively, EBITDA remains stable with respect to 2019.
Market highlights
The USA saw operating EBITDA reach US$73m during the quarter, which represents an increase of 10.5 per cent and an EBITDA margin improvement of 470 basis points. However, adverse weather conditions were experienced during the quarter, particularly in Texas, as four hurricanes, two storms and heavy rains impacted the company's performance in the country.
The macroeconomic context continues to be moderately positive in relation to the construction sector. In infrastructure, the renewal of the FAST Act for one year with US$13.6bn added to the Highway Trust Fund and the announcement of the 2020-21 Florida budget, which includes US$9.9bn in funding for the Florida Department of Transportation, ensure the funding at a state level to continue with the pipeline of infrastructure projects until a more comprehensive plan is approved at a federal level.
In Colombia the company’s volume in 3Q20 improved, versus last quarter’s in line with the market, but remained below the volumes of the 3Q19. Social housing sales increased during September by 43 per cent compared to the same month of 2019 and continue with the positive trend that they have managed to maintain during the COVID-19 crisis. More importantly, non-social housing sales during September, for the first time during the pandemic, increased 16 per cent compared to the same month last year.
In infrastructure, the formal start of the procurement process of the Bogota Metro which will complete towards the end of next year, together with the investments announced by the government for more than COP30trn, divided in the first wave of 5G projects, the Concluir, Concluir, Concluir and Vías para la Legalidad programmes, reaffirm the government’s commitment towards continuing investing in this sector and establish strong drivers for cement consumption in the country during the following 10 years.
The Caribbean and Central America benefitted during the quarter from the self-construction trend that prevails worldwide in emerging markets, which led to improvements in EBITDA and cement volumes, especially in Honduras, Dominican Republic, Haiti and Puerto Rico. The volume of cement in the region showed a YoY increase of 4.7 per cent.
