Inflationary pressures impact Argos results in the 1Q22
Argos (Grupo Argos) reports its 1Q22 generated record revenues of COP2.6trn (US$637.8m), up 11.2 per cent, and EBITDA of COP359bn, 17.8 per cent lower than in the 1Q21, mainly due to higher inflationary pressures that impacted costs associated with raw materials, energy, freight, and operational maintenance. The company highlights the very good price performance in all regions, which is expected to mitigate the impact of inflation on costs going forward.
Cement volumes remained stable at 3.9Mt in the 1Q22, while ready-mix volumes grew 6.3 per cent after reaching 1.9Mm3 in the period.
"Demand for our products and solutions remains very healthy and dynamic in all regions. We are operating at full capacity despite a challenging environment due to global supply chain disruptions and inflation in energetics and raw material costs. In this environment, we are focussed on maximising production at our integrated cement plants to meet our customers' growing needs and on executing a pricing strategy that mitigates the impact of inflation,” said Juan Esteban Calle, CEO of Cementos Argos.
USA
Cement shipments grew 7.3 per cent and ready-mix shipments grew 2.6 per cent. During the period, Argos USA increased its revenues by 3.1 per cent to US$360m and generated an EBITDA of US$40m. The sale of the last cluster of non-strategic ready-mix operations in the US, which included 23 plants located in suburban and rural markets in North Carolina and Florida, generated a gain on sale of US$21.9m. The company plans to invest more than US$90m in capex in this country, corresponding to 46 per cent of total capex for 2022.
Colombia
Ready-mix volumes grew 13.4 per cent and cement volumes remained stable. In March Argos achieved its highest monthly cement dispatches in five years. In addition, exports from Cartagena rose 32 per cent compared to 2021. In Colombia Argos reported revenues of COP632bn, up 4.8per cent, and EBITDA of COP130bn. The residential segment continues to show positive signs. During the period, sales of social and non-social housing grew 6.4 and 5.5 per cent, respectively, and housing starts grew 11 per cent compared to the 1Q21. In infrastructure, Argos remains optimistic due to positive progress in the 4G projects, the Bogotá Metro and Puerto Antioquia.
Caribbean and Central America
Ready-mix volumes grew 11.3 per cent, while cement volumes decreased 11 per cent, mainly due to operational difficulties in Haiti and the Dominican Republic and the government transition in Honduras. Revenues increased 3.4 per cent, with an EBITDA of US$29m. In the region, the industrial segment is expected to perform better in the medium term, due to the progress in some infrastructure projects in Panama and the 22 per cent annual increase in remittances in Honduras, as well as solid demand conditions in the Dominican Republic.
