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Cementos Argos reports a year of strategic milestones

Published by , Editorial Assistant
World Cement,

Cementos Argos has presented its financial figures and strategic milestones for 2018 at its Shareholders Meeting.

The company obtained good EBITDA results, with a consolidated total of COP1.54 billion and growth of 8%, with an EBITDA margin of 18.3%. During their ordinary session, the shareholders approved a payment of COP242/year as dividends, both for ordinary shares and for preferential shares.

The company’s EBITDA and net income grew significantly during the year. The company endorsed its commitment with clients, improved its cost structure, reduced its indebtedness, and increased its financial flexibility. The company has stated that this has provided the foundations for 2019.

In terms of operational results, from a consolidated point of view Argos dispatched 16 million t of cement and 10.3 m3 of concrete. This generated an income of COP8.4 billion. Net income was reported to be COP178 563 million by FY18, meaning it grew substantially compared with the previous year

Business per region

In the US, the company dispatched 5.7 million t of cement and sold 7 million m3 of concrete throughout the year. The company generated US$1.5 billion in income and US$239 million in EBITDA.

In Colombia, the company dispatched 5 million t of cement and sold 2.9 million m3 of concrete throughout the year. The company generated COP2.3 billion in income and COP433 905 million in EBITDA.

In the Caribbean and Central America, the company dispatched 5.1 million t of cement and sold 413 000 m3 of concrete throughout the year. It generated US$593 million in income and US$178 in EBITDA.

Capital Structure

The organisation finished 2018 with a net debt index of 3.7 times over EBITDA plus dividends. The company has stated that this is a considerable improvement when compared with the 4.6 index presented by the end of 2017. The company has stated that this was due to CAPEX optimisation, effort on releasing working capital, and a successful execution of non-strategic divestments. The total debt ended at a figure of COP7.1 billion, which is a decrease of 473 000 million during the year.

The company placed ordinary bonds in June 2018 for COP500 billion, with an average lifecycle of 9.5 years. This was to optimise the duration and cost structure of debt, following the guideline of liability management and replacement. The issue had an over-demand of 1.8 times the initial amount it was offered. The company also obtained a syndicated loan for US$600 million, which improved its credit profile substantially by extending payments scheduled for 2019 and 2020 to five years.

A customer-orientated company

The company started implementing BEST in its regional branches in the US, the Caribbean, and Central America in 2018. These were the locations where the cost and expense optimisation that was done in Colombia will be replicated. With the aim to be more efficient every day, the company achieved productivity levels that enabled it to focus on deepening customer relationships during the year, as well as strengthening its capabilities, aiming for delivering customers a better value proposal.

The company also made progress in the digitalisation of the industry through the platform Argos ONE. This continues to be deployed sequentially in all markets and is positioning the organisation at the leading edge of the sector. With Argos ONE, customers have access to online information and can track their orders, compete requests, perform payments, and carry out quality analysis. This also means productivity. Argos ONE has been used on 59% of cement orders and 40% of concrete orders in Colombia, with a 67% adoption rate in the Dominican Republic and 31% adoption level in the US.

In addition, the company’s corporate chatbot ‘Sara’ was launched in 4Q18. Argos’ virtual assistant uses artificial intelligence to simulate a conversation without the support of a human being. This made Argos the first company in the industry to implement the tool.

Innovative solutions

Currently, more than 30% of the company’s income comes from innovation, and innovation initiatives led to savings of more than COP25 300 million in 2018.

Argos continued expanding and specialising its added value products throughout the year. It launched a new line of dry mortar in Colombia that comprises three references and developed around 250 new concrete formulas among the five lines that already exist in the market. The company also expanded its value product reach in the US and enhanced its portfolio in Puerto Rico for the Caribbean and Central America. It started exploring pozzolanic cement and lime to markets in the West Caribbean and also launched new cements in Honduras.

Facing the future

The company has stated that it will continue focusing its efforts on innovating and serving its clients better every day by strengthening its competitive position in different markets, growing its EBITDA, optimising costs and expenses, capturing synergies, divesting on non-operational and non-streategic assets, managing working capital responsibly, and reducing CAPEX. This was done in order to boost returns on capital employed and reach further financial flexibility that results in value generation.

“I want to thank our shareholders and clients for trusting us to continue creating history together in this great company,” said Juan Esteban Calle, President of Cementos Argos. “This company has the unwavering will of building a society by enabling dreams of housing and infrastructure to come true and impact the lives of millions of people. Today, we are a growing multinational company that operates 15 countries and arrives to more than 34 destinations. It focuses on creating value based on solutions and innovative products, logistic synergies, and a business balance between emerging and developed economies.”

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US cement news Cement news 2018