Higher prices and cost efficiency lead to an Adjusted EBITDA margin
expansion of 20 bp
Cementos Argos S.A. (Argos) is a geographically diverse rapidly growing cement and ready-mix concrete (RMC) company with presence in 16 countries and leading market positions in the US, Colombia, Caribbean & Central America (CCA) and total annual capacity of approximately 23.1 million tons of cement and 14.7 million m3 of concrete.
BVC: CEMARGOS, PFCEMARGOS
SANTIAGOX: CEMARGOSCL
ADR LEVEL 1: CMTOY / ADR 144A: CMTRY - Reg-S: CMTSY
We announced a comprehensive plan to close the gap between the fundamental value and the market value of Cementos Argos that includes:
- Focus to improving further our financial performance with an emphasis on profitability, sustainability and growth.
- We continue to work towards listing our US business on the New York Stock Exchange, once market conditions allow.
- We intend to explore additional mechanisms to make distributions to our shareholders by means different from dividends, that are not limited by the company's accounting profits or reserves.
Consolidated Results
Adjusted EBITDA grew 27% and Adjusted EBITDA margin expanded 20 basis points during the third quarter, on a year-to-year basis. These results were supported by higher prices, strong market dynamics, and an efficient cost management along our footprint. Consequently, our leverage ratio decreased to a level of 2.84 times, the lowest ratio of the last 9 years.
Volumes - Adjusted | QUARTER | YTD | ||||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | |||
Cement | 000 TM | 4,248 | 4,172 | -1.8% | 12,632 | 12,342 | -2.3% | |
RMC | 000 M | 3 | 1,789 | 1,907 | 6.6% | 5,309 | 5,772 | 8.7% |
Key Figures - Adjusted | QUARTER | YTD | ||||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | |||
Revenue | COP Bn | 2,487 | 3,118 | 25.4% | 7,081 | 8,546 | 20.7% | |
EBITDA | COP Bn | 469 | 594 | 26.7% | 1,418 | 1,478 | 4.3% | |
Margin EBITDA | % | 18.8% | 19.0% | 0.2% | 20.0% | 17.3% | -2.7% | |
Net Profit | COP Bn | 85 | 149 | 74.7% | 226 | 222 | -1.7% | |
Net Margin | % | 3.4% | 4.8% | 1.3% | 3.2% | 2.6% | -0.6% |
For a detailed reconciliation of the adjustments please refer to the annex.
Results Per Region
USA
FOB prices increased 16.5% in cement and 16% in ready mix on September, compared to the same month of the previous year, remaining on the highest levels in our recent history in the US.
Cement volumes increased 6.2% compared to the third quarter of 2021, driven by solid demand across our footprint, especially in Florida and the Deep South region. On the ready-mix business, volumes increased 3.6% on a comparable basis versus 2021, with the residential segment driving demand growth.
EBITDA was 26% higher year over year on a comparable basis and the Adjusted EBITDA margin expanded 47 basis points compared to the same period of last year. This was achieved despite the adverse weather conditions generated by Hurricane Ian that affected Florida during the last week of September with an estimated impact on our EBITDA of USD 1 million.
Volumes - Adjusted | QUARTER | YTD | |||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | ||
Cement | 000 MT | 1,498 | 1,591 | 6.2% | 4,363 | 4,651 | 6.6% |
RMC | 000 M3 | 1,081 | 1,119 | 3.6% | 3,407 | 3,549 | 4.2% |
Key Figures - Adjusted | QUARTER | YTD | |||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | ||
Revenue | USD M | 337 | 414 | 22.9% | 1,006 | 1,190 | 18.3% |
EBITDA | USD M | 61 | 77 | 26.0% | 184 | 192 | 3.9% |
Margin EBITDA | % | 18.1% | 18.5% | 0.47% | 18.3% | 16.1% | -2.2% |
For a detailed reconciliation of the adjustments please refer to the annex.
Colombia
The successful deployment of our commercial strategy has made possible to increase prices in the entire product portfolio and in every region of the country. Local prices for cement posted a 18.4% year over year increase and were 4.1% higher sequentially, while ready-mix prices rose 12% year over year.
Cement dispatches were flat during the quarter. Exports from Cartagena increased 37%, reaching 319 thousand tons, the highest quarterly result in the history of the company. In the national market, cement dispatches were 7.8% lower compared to the same period of last year due to the price hike implemented in July which had an impact in that month and was partially recovered in August and September. The ready-mix business continues its steady recovery, supported mainly by formal housing and infrastructure projects. Dispatches were 7.8% higher year over year and reached the highest quarterly result since the second quarter of 2019.
EBITDA grew 6% year over year, when excluding the results from the exports division in which EBITDA was more than 3 times higher compared to last year, ratifying the importance of this division, not only for integration across the region, but also due to its contribution to our financial results. Overall, EBITDA reached COP 157 billion, 14.5% higher compared to the same period of last year. EBITDA margin was 22.3% on the quarter and posted an expansion of 75 basis points.
Volumes | QUARTER | YTD | ||||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | |||
Cement | 000 | MT | 1.554 | 1.537 | -1,1% | 4.359 | 4.517 | 3,6% |
Local Market | 000 | TM | 1.321 | 1.218 | -7,8% | 3.671 | 3.623 | -1,3% |
Exports | 000 | TM | 233 | 319 | 37,0% | 687 | 894 | 30,1% |
RMC | 000 M3 | 660 | 712 | 7,8% | 1.757 | 2.016 | 14,8% | |
Aggregates | 000 | MT | 346 | 332 | -4,2% | 1.094 | 1.063 | -2,8% |
Key Figures | QUARTER | YTD | ||||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | |||
Revenue | COP Bn | 637 | 705 | 10.6% | 1,774 | 2,015 | 13.6% | |
EBITDA | COP Bn | 138 | 157 | 14.5% | 417 | 423 | 1.6% | |
Margin EBITDA | % | 21.6% | 22.3% | 0.8% | 23.5% | 21.0% | -2.5% |
Starting 2022, the exports division that was previously reported on the CCA region is reported in the Colombian region. Total cement represents local market and export volumes.
EBITDA and EBITDA Margin include for 3Q21 COP 5.7 billion generated by the export division
CCA
Cement prices grew 25.7% year over year as pricing power remains strong due to the global cement trading dynamics, which have influenced higher import parity prices in markets with high exposure to international supply.
Local market cement dispatches were 8.9% lower year over year, due to a very challenging social and political situation in Haiti that led to volumes being almost half compared to last year, as well as to the adverse weather conditions during the second half of September that had an impact of around 20 thousand tons in the region that could not be dispatched in that period. Additionally, the governmental transition in Honduras and the major maintenance performed in Dominican Republic also had an impact on cement dispatches. Trading volumes decreased 21% year over year due to our strategy to maximize the usage of our export capacity from Colombia, as well as to the lower dispatches to Haiti.
Despite the impact of more than USD 1 million from the hurricanes on the last half of September, EBITDA closed at USD 31 million, equal to the result obtained on the third quarter of last year, as our successful pricing strategy offset the cost inflation that has affected the region.
Volumes | QUARTER | YTD | |||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | ||
Total Cement | 000 TM | 1,197 | 1,045 | -12.7% | 3,911 | 3,174 | -18.8% |
Local Market | 000 TM | 816 | 744 | -8.9% | 2,599 | 2,386 | -8.2% |
Trading | 000 TM | 380 | 301 | -20.9% | 1,311 | 788 | -39.9% |
RMC | 000 M3 | 48 | 77 | 59.2% | 145 | 206 | 41.8% |
Key Figures | QUARTER | YTD | |||||
2021.Q3 | 2022.Q3 | Var | 2021.Q3 | 2022.Q3 | Var | ||
Revenue | USD M | 125 | 136 | 8.3% | 397 | 411 | 3.6% |
EBITDA | USD M | 31 | 31 | -0.5% | 108 | 92 | -15.2% |
Margin EBITDA | % | 24.8% | 22.8% | -2.0% | 27.2% | 22.3% | -5.0% |
Starting 2022, the exports division that was previously reported on the CCA region is be reported in the Colombian region. Total cement represents local market and trading volumes.
Adjusted EBITDA and EBITDA Margin exclude for 3Q21 USD 1.2 million generated by the export division
Indebtedness and coverage indicators:
Net debt to EBITDA plus dividends ratio decreased during the quarter, closing at 2.84 times due to the solid result in our last 12 months EBITDA and cash generation.
Cash Flow as of September 30th, 2022 (COP Billion1):
Cash flow (COP Mill) | Total |
EBITDA | 1,415,056 |
Net Op. Working Capital | (386,118) |
Maintenance CAPEX + Profitability | (385,212) |
Strategic CAPEX | (27,899) |
Taxes | (217,056) |
Leases operations (IFRS 16) | (131,462) |
Total Free Cash Flow | 267,309 |
Net Financial Expenses | (303,669) |
Net Dividends | (194,704) |
Net Other Non-Operating | 79,083 |
Net Financial Operations | (110,433) |
Divestments, Acquisitions and/or | 360,617 |
Capitalizations | |
Total Financial Cash Flow | (169,106) |
Total Cash Flow for the Period | 98,203 |
Initial Cash Flow | 483,229 |
Exchange rate effect | 64,854 |
Final Cash Flow | 646,286 |
Investment Portfolio as of September 30th, 2022:
Company | % Stake | Price per Share | Value | Value |
(COP) | (COP million) | (USD million) | ||
Grupo Sura | 6.08% | 37,500 | 1,064,810 | 235 |
Total | 1,064,810 | 235 |
1* FX Rate as of September 30th, 2022: COP 4,532.07 / USD
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Cementos Argos SA published this content on 09 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 November 2022 12:30:01 UTC.