Argos, the cement company of Grupo Argos, presented its quarterly results, highlighting record revenues and strong demand for cement and ready-mix, mainly in the United States and Colombia, as well as stable operating results in an environment of high-cost in inflation thanks to the success of its commercial strategy in all geographies, the flexibility of its fuel matrix and the partial hedging of fuel prices.
From April to June, the cement company generated revenues for COP2.9 trillion, 15.3% higher compared to the same months of the previous year. Also, it obtained an adjusted EBITDA* of close to COP525 billion, 2.6% higher than the second quarter of 2021. Net income*** decreased compared to 2021 due to non-recurring operations of asset sales that were reflected in the results of the second quarter of 2021.
It is noteworthy that the adjusted volume* of Ready-Mix in the period rose 13.4% and reached 1.9 million m3, while the adjusted volume of cement* stood at 4.2 million t, representing a comparable growth of 6.2% if the trading business is excluded and a decrease of 4% in general.
In line with its commitment to sustainability and, specially, to the reduction of emissions, the company began a pilot test for the use of calcined clay in the United States and expects to reach production of 3 million tpy of clay in all of its geographies by 2030, which translates into the production of green cement and concrete.
We are convinced of the great opportunity that lies ahead to lead the industry in sustainability and generate greater value for our shareholders and all stakeholders. The calcined clay pilot that we are starting in the USA is another important milestone in our roadmap to produce carbon-neutral concrete by 2050. The results of the second quarter were very positive both in terms of revenue growth and volumes; driven, mainly, by the solidity of demand in the United States and the good dynamics of the Colombian economy amidst a challenging situation of high in inflation and increasing interest rates
During the second quarter, revenues in this country were USD 416 million, 7.5% higher than those registered in the same months of 2021. Adjusted EBITDA*, remained stable at US$75 million, results achieved in part by the US$11 million in savings derived from the fuels hedging strategy. It is worth noting that, in June, Argos achieved the highest monthly EBITDA recorded to date since the company has been present in the country.
Regarding adjusted volumes, the company experienced strong demand across most of its operations. Therefore, dispatches of ready-mix rose 6.4% and totalled 1.2 million m3, as did cement dispatches, which also increased 6.4% and totalled 1.7 million t.
As for the market, positive conditions continue in the residential and commercial segments. Argos continues to monitor the evolution of macroeconomic variables and their possible impact on operations, although it remains optimistic in the medium and long term regarding the already approved bipartisan infrastructure bill, which will translate into greater demand in the medium and long term.
The strong market dynamics continued during the second quarter of the year, supported by the retail segment, residential construction, and infrastructure projects. In the country, Argos' revenues grew 27.1%, reaching COP678 billion, and adjusted EBITDA** increased 12.7%, totalling COP136 billion.
Continuing with the positive performance, concrete sales rose 25.1% and reached 656 000 m3, cement sales increased 13.3%, for a total of 1.5 million t shipped from April to June.
In the country, housing sales and the start of residential projects continue to be a support of the market. In terms of infrastructure, projects such as the Bogotá Metro and 5G will bring significant demand in the coming years.
In the second quarter, revenues were USD 138 million, while adjusted EBITDA** closed at US$32 million, 18.8% below the same period of the previous year, affected by the combination of lower volumes in Honduras and Haiti and the already known inflationary pressures.
In this region, shipments of concrete were positive, increasing 58.9% and stood at 71 000 m3. For its part, cement volumes reached 1 million t, with an improvement in those of the local market with respect to the first quarter of the year and a lower dynamic on the trading business, which resulted in a decrease in shipments of 30% cement. If this line is excluded, cement volumes fall 4.7%.
Regarding these markets, the company remains cautiously optimistic.
* Consolidated Results and US Region:
Adjusted EBITDA excludes: i) For 2Q22 a non-operational expense related to the listing process for COP 16.1 billion, equivalent to US$4.1 million, ii) For 2Q21 EBITDA excludes COP174 billion of the gain on sale of the Dallas divestiture, equivalent to US$48.1 million, COP1.5 billion generated by the Dallas operation, equivalent to US$426 000, and COP8.2 billion generated by the divested RMC operations in FL and NC, equivalent to US$2.3 million.
Adjusted EBITDA Margin excludes: i) For 2Q22 a non-operational expense related to the listing process for COP16.1 billion, equivalent to US$4.1 million, ii) For 2Q21 EBITDA excludes COP174 billion of the gain on sale of the Dallas divestiture, equivalent to US$48.1 million.
Adjusted Ready-mix volumes for 2Q21 exclude 141 000 m3 sold by the divested Dallas operations and 115 000 m3 sold by the operations in FL and NC divested on 1Q22.
Cement volumes exclude since 3Q21 the product bought to third parties used to supply Argos’ operations of RMC in the US, particularly in Texas, to reflect better the degree of integrations of the operations. For purposes of comparability, the adjusted figure for 2Q21 excludes 100 000 t of cement purchased from third parties.
**Colombia and CCA Regions:
Starting 2022, the exports division that was previously reported on the CCA region will be reported in the Colombian region. Total cement represents local market and export volumes.
Adjusted EBITDA and EBITDA Margin include for 2Q21 COP15.3 billion generated by the export division and exclude for CCA US$4.1 million generated by the export business.
***Net income for the second quarter of 2021 includes non-recurring income of COP77 billion associated with the divestment of Dallas.
Read the article online at: https://www.worldcement.com/the-americas/10082022/cementos-argos-reports-all-time-high-quarterly-revenues-mxn29-trillion/