Argos announces growth in FY18 results

The result is thought to be based on geographic diversification, an increase in financial flexibility as a relevant factor for long-term successful performance, and the efforts of the entire organisation to make progress in efficiency and competitiveness. The company has highlighted the 6% decrease in administration and sales expenses.

The company ended the year with an index of net debt to EBITDA plus dividends of 3.7 times, with significant improvement from the 4.6 indicator obtained at the end of 2017. It has been stated that this is a result of capex optimisation, efforts in the release of working capital, and a successful execution of disinvestment of non-operating and non-strategic assets.

In addition, the organisation placed ordinary bonds for COP500 billion with a mean maturity of 9.5 years, in an issuance that had an excess demand of 1.8 times the initial amount offered. This was done within the framework of liability management and substitution to improve the structure of duration and financial cost of debt.

The company has also noted that, within what it calls a highly challenging business context, it dispatched nearly 16 million t of cement with a variation of -1%, and 10.3 million m³ of concrete with a variation of -3%. This represents a consolidated revenue of COP8.4 trillion, which is 1.4% less than 2017.

Business performance per region

The US

Although the economy in the US continues to show strong and healthy fundamentals of growth, the company has reported a challenging year for the construction industry. This is especially thought to be due to excess rain throughout the year. It is reported that public spending in infrastructure continued to show good dynamics, while the housing market decreased its rhythm of growth as a result of the rise in interest rates.

Dispatches in the US reached 5.7 million t of cement with a variation of -2%, and 7 million m³ of concrete. This is 2.5% less than 2017, generating a revenue of US$1.49 billion, with a variation of between -3% and 4%, and EBITDA of US$239 million. This was very similar to the previous year.

Argos has stated that it expects growth in volumes in 2019, both for public construction (which represents 40% of total consumption in the US) and for the commercial segment. This will be within a healthy labour environment, with a positive trend for consumer confidence, greater disposable income for families following tax reform, and expectations of a more moderate rise in interest rates.

Colombia

In Colombia, the construction sector began to show signs of recovery in the second semester, with a growth volume both for cement and for concrete. This is with greater demand in the mass consumption sector, a better macro environment, and an increase in civil works consumption, particularly 4G projects.

Argos has highlighted an EBITDA of COP434 billion with variation of 16.7% compared to the previous year. Cement dispatches are reported to have reached 5.1 million t in Colombia, with a variation of 1.9%, while concrete amounted to 2.9 million m3 with a 3.6% variation. This resulted in COP2.3 trillion in revenues, which is 0.4% less than that of 2017.

The company has noted that several indicators allow optimism for the industry, particularly in the growth of concrete dispatches for civil works and better dynamic construction of regular housing (meaning that which is not low-income) expected in the second part of 2019.

Caribbean and Central American region

Within a challenging environment and with some operations affected by irregular imports of cement and the labour strike of construction workers in Panama, dispatches reached 5.1 million t of cement. This was a 1% growth. 413 000 m³ of concrete was imported, with a variation of -6.9%. These represented revenue of US$593 million, which is 2.2% more than 2017, and EBITDA of US$178 million, which is 3.4% greater than the previous year.

Driven by construction works following the impacts caused by hurricanes Irma and Maria, Puerto Rico in particular showed significant growth, close to 39% in cement dispatches. The company has said that this is evidence of its capacity to supply growing demand while working to improve efficiency and production costs.

The region is expected to be stable in 2019, particularly given the company’s operations, diversification, and the amount of markets in which it operates.

Conclusion

“We are very pleased with the results obtained in 2018 in terms of progress in efficiency and competitiveness, consolidated EBITDA growth, working capital, and capex optimisation,” said Juan Esteban Calle, President of the company. “This was derived in a substantial decrease in debt stock, allowing greater financial flexibility to continue growing and, more importantly, contributing together with our clients to make dreams of housing and infrastructure a reality for millions of people in the countries where we operate.”

In 2019 the company plans to continue focusing its efforts on innovation, strengthening its competitive position in different markets, growing EBITDA, optimising costs and expenses, capturing synergies, divesting non-operating and non-strategic assets, managing working capital responsibility, and reducing capex.

Read the article online at: https://www.worldcement.com/the-americas/25022019/argos-announces-growth-in-fy18-results/