Cementos Argos 3Q 2020 Net Income Doubles Year-on-Year

Medellin-based multinational cement/concrete giant Cementos Argos reported November 10 in a filing with Colombia’s Superfinanciera oversight agency that its third quarter (3Q) 2020 net income more-than doubled year-on-year, to COP$73 billion (US$20 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) also rose 9% year-on-year, to COP$479 billion (US$132 million), according to the company.

However, gross revenues dipped 5.6% year-on-year, to COP$2.36 trillion (US$649 million).

As for nine-months 2020, cumulative net income so far has dipped to COP$113 billion (US$31 million) versus COP$147 billion (US$40 million) in nine-months 2019, according to the company.

EBITDA rose in 3Q 2020 “despite the impact on volumes originated, mainly due to hurricanes and heavy rains in the United States,” according to Cementos Argos.

In the latest quarter, corporate-wide consolidated shipments of cement fell by 8.4% and concrete declined by 19.5%.

Corporate overhead reductions and “big-data” analytical innovations “allowed the company to achieve significant optimizations in costs and expenses, accompanied by better prices in Colombia and the United States,” the company added.

“Argos advanced in the implementation of artificial intelligence to analyze historical data on cement kiln and mill [operations] and thus obtain the optimal energy and raw materials mixtures to produce cement. The expected savings are US$13 million annually starting in 2022,” according to the company.

In the U.S. market, demand for cement and concrete “continued to show strength even amid the [Covid-19] pandemic and the political uncertainty surrounding the presidential elections,” according to Cementos Argos.

“The macroeconomic context continues to be moderately positive in relation to the construction sector. In infrastructure, the renewal of the ‘Fast Act’ for a year with US$13.6 billion added to the Highway Trust Fund and the announcement of the Florida 2020-2021 budget, which includes US$9.9 billion in funding for the Florida Department of Transportation, ensure the financing necessary to continue infrastructure projects,” according to the company.

In Colombia, “cement volumes of the company improved [in 3Q 2020] compared to the prior quarter, in-line with the market, but still remained below those of the third quarter of 2019,” according to the company.

Colombian government-subsidized home sales “increased during September by 43% compared to the same month of 2019 and continue with a positive trend” even in the face of the Coronavirus crisis, according to Cementos Argos. Non-subsidized home sales during September 2020 likewise increased 16% year-on-year.

As for major Colombian infrastructure projects, “the formal start of the construction of the Bogotá Metro, together with the investments announced by the government for more than COP$30 trillion [US$8.2 billion] in the first wave of ‘5G’ [highway] projects” along with completion of previously-started highway projects “reaffirm the commitment to continue investing in this sector and establish strong drivers for the consumption of cement for the next 10 years,” according to the company.

As for Caribbean and Central America markets, “this region benefited during the quarter due to the trend of [home improvement] self-construction that prevails in emerging markets, leading to improvements in EBITDA and volumes of cement especially in Honduras, Dominican Republic, Haiti and Puerto Rico,” the company added.