May 19, 2024

Cementos Argos 3Q 2021 Profits Jump 68% Year-on-Year

Medellin-based multinational cement/concrete giant Cementos Argos reported November 8 a 68% year-on-year hike in third quarter (3Q) 2021 net income, to COP$73 billion (US$18.8 million).

Comparable earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 2.4%, to COP$473 billion (US$122 million), “due mainly to the good performance of Colombia in a combination of better market environment and commercial efforts to increase the company’s exposure to the retail segment,” according to Argos.

Meanwhile, 3Q 2021 revenues rose 5.3% year-on-year, to COP$2.36 trillion (US$609 million).

“Strong market dynamics during the quarter led to like-for-like increases in 3Q 2021 consolidated cement and ready-mix volumes of 11.9% and 5.7% respectively versus 3Q 2020,” according to the company

Meanwhile, cement prices rose by 1.1% and ready-mix concrete by 2.3% year-on-year in the U.S. region and the Central America/Caribbean region saw cement prices jump 6.1%, according to the company.

As for the future, “approval of the US$1.2 trillion bipartisan infrastructure deal in the U.S. sets out a favorable environment for increased demand in Argos’ most relevant market,” according to the company.

“Argos holds a privileged position given its capacity to locally produce clinker and cement in each of the regions where we operate,” added Cementos Argos CEO Juan Esteban Calle.

“Additionally, the strategic geographic location of our network of ports and our own fleet of vessels facilitate the integration of the Cartagena plant –one of the most efficient in the Americas — with the grinding stations and ready-mix operations in the U.S. and the Caribbean,” he added.

U.S. Region Results

The U.S. region operations saw cement sales volumes rise 11.6% while ready-mix concrete volumes rose 1.5% versus 3Q 2020.

“These results are particularly good taking into account the challenging weather conditions of places like Houston and Georgia, which exhibited during the quarter the highest number of bad weather days in the last four and five years, respectively,” according to Argos.

“These improvements in volumes are due mainly to the economic reactivation of the country, especially of the oil industry and the tourism sector, which are important drivers of economic growth in the regions where Argos operates in the U.S.,” the company added.

“Market dynamics continue to be positive in the residential segment. Housing starts and building permits increased during the quarter 8.7% and 6.2% year over year, confirming the continuation of the positive trend on this segment.”

Colombia Results

Meanwhile, the Colombia market experienced “full recovery of demand across the country, following the social unrest experienced on April and May. Argos’ dispatches of both cement and ready-mix evolved accordingly, increasing 14.4% and 9.3% respectively versus 3Q 2020,” according to the company.

“These improvements are associated to the commercial efforts deployed by the company to increase its exposure to the retail segment, in the case of cement, and to the improvement of the formal construction sector following the pandemic, in the case of ready-mix.

“In terms of pricing, the cement segment remained stable sequentially, while ready-mix prices decreased 1.9% versus 2Q21.

“The commercial dynamics of the market continue to improve. On residential construction, year to date sales of social [government-subsidized] and non-social housing grew 48% and 47% respectively year over year, and housing starts reached in July a new all-time high monthly figure, signaling the continuation of the positive trend on this segment.

“Additionally, the infrastructure pipeline of the country remains strong with projects such as Santana-Mocoa-Neiva, Malla Vial del Meta and Malla Vial del Valle [highways] which are scheduled to begin construction in 2022.”

Caribbean-Central America Region Results

In this region, “cement dispatches increased 10.1% year over year, mainly due to the 71.3% increase in the trading business. This positive performance of the trading segment is an indirect effect of the exports to the U.S., which have grown consistently compared to the previous year, accounting for 109,000 tons exported to the U.S. during the quarter and 272,000 tons during the entire year,” according to Argos.

“Volume evolution versus 3Q 2020 was steady in the case of Dominican Republic, positive in Honduras, Panamá and the French Guiana, and negative on the case of Haiti and Puerto Rico.

“Haiti was affected by a combination of social and political uncertainty, together with technical difficulties in the plant derived from the earthquake of mid-August.

“Puerto Rico was affected by a higher comparison base for 3Q 2020 derived from the pent-up demand following the quarantines experienced during the pandemic. All the other countries benefited from good commercial dynamics.

“Across the region, average prices increased 6.1% year over year, reaching the highest average quarterly price of the last two years, resulting from the combination of recovering local market and the increase in import parity prices,” the company added.

Cementos Argos now operates in 16 countries with favorable market positions in the U.S., Colombia, Caribbean/Central America and total annual capacity of 23 million tons of cement and 14.4 million cubic meters of concrete, according to the company.

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