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Votorantim Cimentos shares financial results

Published by , Deputy Editor
World Cement,

Votorantim Cimentos ended 2020 with global net revenue of R$16.7 billion, an increase of 29% compared to 2019. This result can be primarily explained by the increase in sales volume in Brazil, Canada and the United States, and by the positive impact of the devaluation of the real on the results of the other regions. Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) was R$3.8 billion, an increase of 43% over the previous year, with an EBITDA margin of 22.9%, an increase of 2.4 percentage points compared to 2019. At the end of 2020, the company’s leverage (net debt/EBITDA ratio) was 1.96x, the best result in the last ten years.

In 2020, the company sold 32.4 million tons of cement in the countries where it operates (Bolivia, Brazil, Canada, Morocco, Spain, Tunisia, Turkey, United States, and Uruguay), an 8% increase in comparison to the volume sold in 2019.

“Last year was extremely challenging due to the pandemic and its impact around the world. We implemented a contingency plan to protect people’s lives and preserve our operations. This enabled us to respond quickly both in Brazil and in the other markets where we operate, and end the year with higher sales, increased cash generation and the lowest leverage in the last ten years,” said Osvaldo Ayres Filho, global CFO, Votorantim Cimentos.

The company’s net income for the year was R$437.5 million, a 20% drop in comparison to the previous year. This can be explained primarily by non-recurring gains in 2019 caused by the exclusion of ICMS from the PIS/COFINS calculation base and the impairment of operations in Turkey and Bolivia, with no cash effect, carried out in 2020.

In line with its expansion strategy, in November 2020, Cementos Artigas, a Votorantim Cimentos joint venture with the Spanish company Cementos Molins, started a project to unify its industrial activities in Uruguay. With an investment of US$40 million, the initiative involves the integration of industrial facilities, which until then were divided between a factory located in Montevideo and the main plant in the city of Minas, 100 km from the capital. The current cement grinding and dispatch operations of the Montevideo plant will be relocated to the Minas plant, resulting in a unified and more efficient and sustainable production line that will start operating in 2022. The project will yield important benefits in competitiveness and environmental gains due to the efficiency of the new installations and a 40% reduction in electricity consumption.

In December, Votorantim Cimentos announced the combination of assets of its wholly owned subsidiary, St Marys Cement Inc. (Canada), with McInnis Cement Inc. to manufacture, distribute and sell cement in Canada and the United States. The combined entity will be formed by Votorantim Cimentos International (VCI), an international investment platform and wholly owned subsidiary of Votorantim Cimentos, the seventh largest cement producer in the world, and by Caisse de dépôt et placement du Québec (CDPQ), a long-term institutional investor, through its participation in McInnis Holding Limited Partnership (McInnis Holding). VCI will hold 83% and CDPQ will hold 17% of the shares in the joint venture. The transaction remains subject to approvals by regulatory authorities. The two companies will continue to operate as separate businesses pending the closing of the transaction.

Construction for the expansion of the Pecém (CE) plant, which had been interrupted in March 2020 due to the coronavirus pandemic, resumed in September. The expansion project will increase the unit’s current 200 000 tons/year cement grinding capacity by 800 000 tons/year. Upon completion, the Pecém plant will have a total cement production capacity of 1 million tpy, increasing its product distribution capacity and efficiency. Construction is expected to be completed in the first half of 2021.

In November, to reinforce its ESG practices, Votorantim Cimentos published its 2030 Sustainability Commitments. The document includes targets that aim to align the company’s worldwide operations to current and future needs of society, creating a positive impact throughout its chain and in the communities where it operates. The commitments are divided into seven pillars: ethics and integrity; health, safety and well-being; diversity and inclusion; innovation; environmental footprint; circular economy; and shared value.

Results in Brazil (VCBR)

In Brazil, according to the National Cement Association (SNIC), cement sales grew 11% in 2020, which also boosted the recovery of prices in the local market. The growth was driven by changes in consumption patterns in the country during the pandemic that led to an increase in civil construction, by the emergency aid granted by the federal government, and by low interest rates, which also resulted in the recovery of the real estate market. Votorantim Cimentos’ net revenue in Brazil in 2020 was R$7.9 billion, a 23% increase compared to 2019. Adjusted EBITDA grew 47%, to R$1.6 billion.

Results in North America (VCNA)

In North America, net revenue totalled R$5.4 billion last year, a 43% increase compared to 2019. Adjusted EBITDA in the region in 2020 was R$1.5 billion, up 43%. Positive results in North America were mainly due to the effect of exchange rates, higher sales volume in Canada in the second quarter, solid sales volume in the United States, and the milder winter at the beginning of the year.

Results in Europe, Asia and Africa (VCEAA)

In Europe, Asia and Africa, net revenue in 2020 was R$2.6 billion, an increase of 22% over the previous year. The region was the most impacted by the coronavirus pandemic, at different times and intensity, with operational performance resuming during the year. Adjusted EBITDA in the region was R$528 million, an increase of 21% over 2019, as an effect of the real devaluation.

Results in Latin America (VCLATAM)

In Latin America, net revenue in 2020 was R$823 million, an increase of 25% compared to 2019. Adjusted EBITDA in 2020 was R$233 million, up 98%. The increase was driven by high sales volume in Uruguay, which partially offset the challenging market situation in Bolivia, created both by the coronavirus pandemic and by local macroeconomic challenges.

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