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Argos shares Q4 financial results

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World Cement,


Main achievements of Reset, Argos’ comprehensive plan to mitigate the effects of COVID-19:

Health, safety, and employment:

  • Argos successfully implemented health and safety protocols to protect all employees in the value chain.
  • The company restarted operations following strict health and safety measures in all the countries where it operates.
  • Argos protected 3733 jobs in Colombia and 3356 jobs in the other regions.

Liquidity:

  • The company generated free cash flow for 1 trillion pesos, which allowed it to end up with a solid cash position of COP 621 billion at the end of 2020, while reducing total debt for the year.
  • Argos achieved savings of US$11.6 million during the fourth quarter and US$115 million for the year, thus exceeding the initial goal of US$94 million

Operational excellence:

  • The company achieved an increase in the implementation of the Argos ONE platform in the three regions.
  • Argos implemented its Digital Twin project which, through data analysis and artificial intelligence, improves the variability and quality of products and guarantees an optimum combination of assets in operations. Annual savings of US$13 million are expected as of 2022.

“Thanks to our flexibility and resilience and the commitment, creativity and contribution of our employees, in 2020 we achieved an operating result even higher than in 2019. We took relevant steps in terms of financial flexibility, we deepened organizational efficiency. We strengthened our portfolio with specialised products and services, and we continued to create social value for the different stakeholders. The experience of the last year will allow us to be more prepared to face the challenges and take advantage of the opportunities that the future presents us with,” said Juan Esteban Calle, CEO.

In the midst of a year of uncertainty and complexity, in which the priority for companies became preserving cash, maintaining jobs and mitigating negative impacts as much as possible, the results of Argos, the Grupo Argos’ cement subsidiary, were satisfactory.

At the end of the fourth quarter, Argos reported an EBITDA* of COP 448 billion, representing an increase of 16.3% compared to the same quarter of 2019. This is due to greater economic dynamics in the three regions and cost and expense efficiencies captured in the RESET programme's execution. Likewise, the company has a cumulative EBITDA* of COP 1.7 trillion, 4.5% more. Revenues from October to December were COP 2.3 trillion pesos, with a decrease of 1%, and consolidated revenues were COP 9 trillion, 4% less than last year. In 2020, the net profit was COP 78 billion.

The company highlights a 2% increase in cement volumes during the last quarter of the year, where it dispatched close to 4 million t. This increase was caused in part by greater export activity from Cartagena and trading in the Caribbean and Central America Region. In regard to the full year, cement dispatches were close to 15 million tons, a reduction of 9.1%.

The adjusted concrete volumes, excluding the figures from the 2019 divestiture in the United States, decreased 15.8% during the quarter and 16.3% year over year, on a like for like basis. This goes to show the slower dynamics in the commercial segment of the United States as well as in the formal construction in Colombia. It is important to remember the impact that the hurricanes and heavy rains had on the business in the United States and the operational closures that lasted ten to twelve in Colombia and most of the markets in Central America and the Caribbean due to the pandemic. This impact was offset by price improvements in Colombia and the United States, cost and expense efficiencies in all operations, along with the devaluation of the Colombian peso.

Performance by regions:

In the USA, efforts to increase profitability led to 15.8% growth in quarterly EBITDA *. During that same term, RESET generated savings of US$4.6 million. At the end of the quarter, cement shipments decreased 3%, and concrete shipments decreased 15.9%. The foregoing reflects the impact of adverse weather conditions and challenging market conditions in the commercial segment that were partially offset by a greater contribution from the residential and infrastructure segments in concrete sales.

Slightly higher prices and lower volumes caused revenue contraction. However, in the Carolinas and the south of the country, volumes in the last quarter grew year-on-year to double digits. This in part due to the fact that the company managed to place the Argos seal in relevant projects such as distribution centres and large warehouses. On a cumulative basis, cement shipments decreased 6.4% and concrete shipments, 9.9%.

The performance of this region, throughout the year, was satisfactory despite the challenges derived from weather conditions and the effects on the economy due to the uncertainty of COVID-19 and the presidential elections. The consolidated EBITDA* of the company in the USA reached US$257 million, a growth of 6.3% in comparison to 2019.

In Colombia, Argos reached US$1.9 million in savings derived from RESET. During the last quarter of the year, the volumes of cement and concrete showed a reduction of 1.6% and 12%, respectively. Likewise, the regional revenues during this term decreased 3% and EBITDA by 1.7%.

Although the industry, in general, was impacted in its 2020 results, the country showed a favourable dynamic in the residential segment, reflecting the national government’s successful implementation programme that seeks to provide a total of 200 000 subsidies for acquiring housing between 2020 and 2022. In this context, cumulative cement and concrete shipments decreased 18.3% and 25.7%, respectively. On the other hand, the revenues for the year were 15.3% less than in 2019, and the EBITDA * was lower by 17.5%, thus closing the year at COP 401 billion.

The Caribean and Central America Region reported US$1.8 million in RESET savings during the quarter. Greater exports and trading activity drove the growth of cement volume during the final quarter of the year, a figure that increased by 13.5% compared to the same term in 2019. The aforementioned was partially offset by the fall in prices and the revaluation of the currency in Haiti. During this same term, revenues remained stable, and EBITDA decreased 1.7%.

Regarding the consolidated performance of the year, cement shipments in local markets decreased 3.3% as a consequence of the impact of two hurricanes, the prolonged isolation measures, and the limitations for investment in infrastructure, given the focus of public budgets on pandemic care. In 2020, revenues were reduced by 16.6% and EBITDA by 20.7%, thus achieving US$117 million.

However, the recovery speed for demand, driven primarily by the self-construction segment, in markets such as the Dominican Republic, Puerto Rico and Honduras has helped the region’s consolidated results to be less affected than the foreseen. All this considering the magnitude of the challenges faced.

Read the article online at: https://www.worldcement.com/the-americas/25022021/argos-shares-q4-financial-results/

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