Medellin’s Cementos Argos Sees 2016 Profits Dip 14.5% Year-on-Year
Medellin-based multinational cement giant Cementos Argos announced February 24 that its full-year 2016 net profits dipped 14.5% year-on-year, to COP$420 billion (US$145 million).
However, full-year 2016 earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8.7% year-on-year, to COP$1.65 trillion (US$570 million), according to the company, a division of industrial conglomerate Grupo Argos.
Because of delays in highway infrastructure projects in Colombia, 70% of the company’s revenues in 2016 were generated outside of Colombia. Cementos Argos is now a major cement producer in the United States – a major contributor to its profitability.
In addition to its Colombian and U.S. operations, Cementos Argos also operates in Caribbean markets and in Central America. Argos has an annual production capacity of approximately 23 million tonnes of cement and 18 million cubic meters of ready-mix concrete (RMC), according to the company.
“We are very satisfied with the results of the United States regional operation, as this confirms the visionary decision taken by the company more than 11 years ago to penetrate the largest economy and the most demanding market in the world,” said Cementos Argos president Juan Esteban Calle.
“This diversification allows us to balance the economic cycles of different markets, boost the company’s results and boost the generation of value to our shareholders,” he added.
In Colombia, 2016 shipments of cement dropped 19% year-on-year, while RMC shipments likewise fell 13%.
“Our volumes decreased more than the market due to our greater exposure to the infrastructure and industrial segments, as well as to the increasing volume of imports,” according to the company.
“As leaders in the infrastructure segment, we expect to benefit more from the growing demand [in Colombia] for shipments to 4G [fourth-generation highway construction] projects, which should begin in the second half of 2017.
“To date, we have signed contracts for the supply of cement or concrete for 40 functional units of the first and second waves of the 4G program. Our market share measured in functional units of the first wave for the supply of cement amounts to 79%.
“We reaffirm our optimism in the infrastructure sector, bearing in mind that more than 20 projects of the first and second wave of the 4G projects, as well as of the privately owned PPPs [public-private partnerships] already have achieved financial closures, and a number of these projects are in preliminary stages of construction.
“In addition, we see opportunities in the national government’s plans for the improvement of tertiary roads, which represent 70% of the country’s total road network, as a fundamental element in the post-conflict issue. Argos has designed a cost-effective solution called ‘cement floor,’ and we have already executed some pilot projects in the department of Antioquia,” the company added.