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Argos reveals it experienced increased revenues and Ebitda in 2019

Published by , Deputy Editor
World Cement,

In the US, the company's main market, cement sales reached 6.3 million t, with a record growth of 9.5%, around 545 000 000 t. In Colombia, a significant price recovery was achieved based on the demand growth of the industry and the acceptance of the company’s value proposition.

Argos Cement, a subsidiary of the Grupo Argos business, closed 2019 satisfactorily with consolidated revenues of 9.3 trillion pesos, an increase of 11.4%, and a consolidated Ebitda of 1.7 trillion pesos, 14.3% higher compared to last year, with a margin of 18.7%.

Argos dispatched in a consolidated way 16 million t of cement and 10 million m3 of concrete, with variations of 0.6% and -1.5%, respectively, compared to the end of 2018. These volumes reflect a positive growth in demand in the United States, the still challenging market conditions in Honduras and Panama, and the short-term effect of the strategy for price recovery in Colombia.

In 2019, the company’s continual strategy of financial flexibility was carried out through the optimiation of working capital, the conservation of investment in capex and compliance with divestments of non-operational or non-strategic assets, specifically in the United States and in Colombia.

“In 2020 we will continue taking important steps in the consolidation of our business platform in the Americas, by having as fundamental pillars, the search for commercial excellence, innovation in products and solutions, the granular segmentation of the market to provide our clients with outstanding solutions and the optimisation of our operations to achieve the value creation goals that our shareholders are expecting, ” said Juan Esteban Calle, Argos CEO .

Business performance by regions:

In the United States, the company achieved volume growth both in the cement business and in the concrete business. At the end of the year, cement shipments grew 9.5%, reaching 6.3 million t, while the volume of concrete stood at 7.1 million m3, an increase of 1.2%. Likewise, revenues closed at US$1.6 billion, an increase of 7.8 percent, and Ebitda reached US$268 million, increasing by 12%.

In market terms, a positive outlook is maintained based on low mortgage rates, which have reduced housing inventories and highlights the significant increase in public spending on construction.

In Colombia , a significant price recovery was achieved, supported by the demand growth of the industry and the growing acceptance of the Argos value proposition, both in the mass and industrial markets. Of the 34 countries where the company sells, measured in dollars, Colombia has the lowest priced cement and it is the second lowest in the Americas, after Brazil, making it much lower than parity import prices.

Despite the advances in prices and value proposition, the results were affected by the high inflation of fuel costs, which increased 7.14% in 2019 compared to the year before, especially due to the increase in the internal price of coal during the first semester. However, the flexibility strategy of the energy matrix helped to mitigate this impact.

In addition, during the last quarter, shipments were affected by a 13-day closure of the Bogota – Medellin highway, due to a significant landslide a few kilometres from the Rioclaro Plant. The market also suffered restrictions on deliveries as a result of social protests in late November and early December in the main cities of Colombia. In this context, cement volumes in the region reached 5 million t, with a variation of -3 percent and those of concrete reached 2.7 million m3, with a variation of -5.3% in comparison to the closure of 2018.

In turn, revenues closed at 2.3 trillion Colombian pesos, increasing 3.8% year-over-year and Ebitda approached 522 billion pesos, an increase of more than 20%.

The Colombian market continues to show a positive growth trend. Important infrastructure, housing and commercial buildings projects continue to drive the development of the sector.

In the Caribbean and Central America Region, the company faced significant challenges due to the short-term difficulties facing the economies of Honduras and Panama but managed to compensate to some extent the impact on the results with the growth of exports and the good performance of operations in the Dominican Republic and Haiti.

In 2019 cement volumes reached 4.9 million t and concrete volumes reached 349 000 m3, with year-to-year variations of -5.4% and -15.4 %, respectively.

Consolidated revenues were US$535 million, decreasing 9.7% and Ebitda registered US$147 million, with a variation of -17.6%. Despite the previous results, which reflect the short-term challenges faced in Panama and Honduras, the region remains the most profitable for the company in terms of Ebitda margin and return on capital employed.

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