InterCement sees light at the end of the tunnel

Following InterCement Participações’s financial and management adjustment measures of the last two years, the cement producer is set to return to the markets in a leaner, healthier way.

Between 2015-2018 the company, like other industry players, was hit in Brazil by falling cement demand and weighed down by high debts.

“Many difficult decisions were made, but they made a lot of sense for the company,” Flávio Mendes Aidar, CEO of InterCement Participações, told Brazil-based business newspaper Valor. Mr Mendes Aidar took the helm at InterCement in March 2019. At the time its financial leverage was more than five times net debt over EBITDA, despite European asset sales of EUR707m (US$801.6m) and a public offering of 49 per cent of Loma Negra shares on the New York Stock Exchange which saw more than US$1bn flow to InterCement.

Sharp-cutting measures were required and the company’s hierarchy was streamlined, reducing to 40 people from over 200. In addition, decision-making was transferred to subsidiaries while the holding company focussed on strategy. Adjustments were made to improve capacity utilisation and lower high fuel costs, saving BRL50m (US$8.8m) in 2021 alone.

Today, EBITDA margins have improved, increasing from five to 30 per cent in Brazil and doubling to 30 per cent in the group’s global businesses.

At the end of the third quarter of 2021, the group’s net debt was US$1.36bn with leverage closing at 2.9 times. In Brazil leverage has fallen to 2.5 times. Revenues advanced 32.6 per cent to US$492m while EBITDA reached US$127m and net income US$28m. Sales volumes totalled 5.43Mt, of which 45 per cent is generated in Brazil, 30.5 per cent in Argentina and 24 per cent in Africa.