Cementos Argos 3Q 2023 Profits Jump 173% Year-on-Year

Medellin-based multinational cement/concrete giant Cementos Argos announced November 8 that its third quarter (3Q) 2023 net income soared 173% year-on-year, to COP$250 billion (US$61.7 million).

The profits jump came despite a 1% decline in gross revenue, at COP$3.087 trillion (US$762 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 25% year-on-year, to COP$742 billion (US$183 million), according to the company.

“EBTIDA margin expanded 500 basis points, to 24%, representing the best quarterly result in Cementos Argos’ history,” according to the company.

Cementos Argos operates in 16 countries with “leading market positions in the U.S., Colombia, Caribbean & Central America,” with total annual production capacity of 23.1 million tons of cement, according to the company.

“The results were driven by strong pricing dynamics across all regions, combined with cost efficiencies,” according to Cementos Argos.

However, total cement dispatches dipped 4.5% year-on-year, at 3.98 million tons, “caused by operational issues in our Newberry plant in the U.S., slightly weaker local market demand in Colombia and the social and political context in Haiti,” according to the company.

Ready-mix concrete volumes for 3Q 2023 likewise dipped 10.8% year-on-year, to 1.7 million cubic meters, “mainly due some continued softening in demand in Florida and Texas,” the company added.

In the U.S. market, price hikes of 13.2% in cement and 14.3% in ready mix concrete “coupled with cost control and productivity improvements across both segments led to an accumulated EBITDA 42% higher and a margin expansion of close to 450 basis points year-to-date,” according to the company.

“Regarding segment trends and our expectations for the remainder of 2023 and the year 2024, we recognize that, despite the U.S. housing market being affected by affordability and supply, there is significant constrained demand for housing,” according to Cementos Argos.

On the other hand, “infrastructure and public construction spending is growing at double digits, driven by federal and state funded projects of which we expect growing demand for the coming months and years,” the company added.

As for the Colombia market, “the main drivers for the solid results in 3Q 2023 were the continuation of our pricing and cost control strategies and the constant quest for profitability. Local cement prices posted a 15% year over year increase, while ready-mix prices rose 21.6% year over year,” the company explained.

“In terms of cement volumes, exports from Cartagena increased 19.2%, reaching 380,000 tons during the quarter and 1.0 million tons year to date.

“The local Colombia market cement volumes, on the other hand, decreased 4.8% during the latest quarter when compared to the same period of last year.

“Nevertheless, Argos exceeded industry performance as volumes declined 1.4% less than the benchmark indicator for grey cement. Our ready-mix volumes decreased 10.8% on a year-to-year basis as a result of our determination to prioritize profitability above volume,” the company added.

As for Central America/Caribbean (CCA) markets, “local market cement dispatches during 3Q 2023 increased 3.7% in Central America following the positive dynamics in Panama, while in the Caribbean, volumes were 2.8% lower despite the strong performance in the Dominican Republic market, which was offset by the deterioration of the political and social situation in Haiti,” according to Cementos Argos.

“Trading volumes [in CCA] saw a 44% year-over-year decline, mainly due to a higher utilization of our export capacity from Colombia. Regarding cement pricing dynamics, in local markets average prices increased 2.5% year over year,” the company added.