September 23, 2023

Cementos Argos 2Q Net Income Plummets 97% Year-on-Year

Medellin-based multinational cement/concrete giant Cementos Argos announced August 8 that its second quarter (2Q) 2022 net income fell 97% year-on-year, to COP$5 billion (US$1.15 million).

“Net income decreased due to non-recurring operations of asset sales that were reflected in the results of the second quarter of 2021,” according to the company.

However, revenues jumped to an all-time quarterly high of COP$2.8 trillion (US$648 million), up 15% year-on-year.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2.6%, to COP$525 billion (US$121 million), according to the company.

“Ready-mix volumes were favored by solid sales dynamics, especially in the United States and Colombia,” according to the company. “Record revenues were mainly leveraged by the company’s commercial strategy and by the higher volumes.”

The company also cited “stable operating results in an environment of high-cost inflation, thanks to the success of its commercial strategy in all geographies, the flexibility of its fuel matrix and the partial hedging of fuel prices.

As for its efforts to cut “global warming” emissions, “the company began a pilot test for the use of calcined clay in the United States and expects to reach production of 3 million tons of clay per year in all of its geographies by 2030, which translates into the production of green cement and concrete,” according to Argos.

Colombia Results

In Colombia, “strong market dynamics continued during the second quarter of the year were supported by the retail segment, residential construction and infrastructure projects,” according to Argos

As a result, Colombia revenues grew 27.1% year-on-year, to COP$678 billion (US$157 million), while adjusted EBITDA increased 12.7%, to COP$136 billion (US$31 million).

“Continuing with the positive performance, concrete sales rose 25.1% and reached 656,000 cubic meters, cement sales increased 13.3%, for a total of 1.5 million tons shipped. Housing sales and the start of residential projects continue to be a support of the market. In terms of infrastructure, projects such as the Bogotá Metro and 5G [fifth-generation highway construction] will bring significant demand in the coming years,” the company added.

USA Results

USA revenues rose 7.5% year-on-year, to US$416 million, while adjusted EBITDA “remained stable at US$75 million, achieved in part by the US$11 million in savings derived from the fuels hedging strategy.”

As for sales volumes, “the company experienced strong demand across most of its operations. Therefore, dispatches of ready-mix rose 6.4% and totaled 1.2 million cubic meters, as did cement dispatches, which also increased 6.4% and totaled 1.7 million tons,” according to Argos.

Caribbean and Central America (CCA) Region

For the CCA region, 2Q 2022 revenues were US$138 million, while adjusted EBITDA fell 18.8% year-on-year, at US$32 million, “affected by the combination of lower volumes in Honduras and Haiti and the already known inflationary pressures,” according to Argos.

“In this region, shipments of concrete were positive, increasing 58.9% and stood at 71,000 cubic meters. For its part, cement volumes reached 1 million tons, with an improvement in those of the local market with respect to the first quarter of the year, but a lower dynamic on the trading business, which resulted in a decrease in shipments of 30% cement. If this line is excluded, cement volumes fell 4.7%.”

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