Argos Cement, a subsidiary of the Grupo Argos business, closed 2019 satisfactorily with consolidated revenues of 9.3 trillion pesos, an increase of 11.4 percent, and a consolidated Ebitda of 1.7 trillion pesos, 14.3 percent higher compared to last year, with a margin of 18.7 percent.
Argos dispatched in a consolidated way 16 million tons of cement and 10 million cubic meters of concrete, with variations of 0.6 percent and -1.5 percent, respectively, compared to the end of 2018. These volumes reflect a positive growth in demand in the United States, and the still challenging market conditions in Honduras and Panama, and the short-term effect of the strategy for price recovery in Colombia.
In 2019, our continual strategy of financial flexibility is also to be highlighted. It has been carried out through the optimization of working capital, the conservation of investment in capex and compliance with divestments of non-operational or non-strategic assets, specifically in the United States and in Colombia.
“In 2020 we will continue taking important steps in the consolidation of our business platform in the Americas, by having as fundamental pillars the search for commercial excellence, innovation in products and solutions, the granular segmentation of the market to provide our clients with outstanding solutions and the optimization of our operations to achieve the value creation goals that our shareholders are expecting, ”said Juan Esteban Calle, Argos CEO.
Business performance by regions:
- In the United States, the company achieved volume growth both in the cement business and in the concrete business. At the end of the year, cement shipments grew 9.5 percent, reaching 6.3 million tons, while the volume of concrete stood at 7.1 million cubic meters, an increase of 1.2 percent. Likewise, revenues closed at 1.6 billion dollars an increase of 7.8 percent, and Ebitda reached 268 million dollars, increasing by 12 percent.
In market terms, a positive outlook is maintained based on low mortgage rates, which have reduced housing inventories and highlights the significant increase in public spending on construction.
In this country the evolution of the company's results, the attractive investment environment and the good moment of the American economy continue to demonstrate the great success of the investment thesis.
- In Colombia, a significant price recovery was achieved, supported by the demand growth of the industry and the growing acceptance of the Argos value proposition, both in the mass and industrial markets. Of the 34 countries where the company sells, measured in dollars, Colombia has the lowest priced cement and it is the second lowest in the Americas, after Brazil, making it much lower than parity import prices.
Despite the advances in prices and value proposition, the results were affected by the high inflation of fuel costs, which increased 7.14 percent in 2019 compared to the year before, especially due to the increase in the internal price of coal during the first semester. However, the flexibility strategy of the energy matrix helped to mitigate this impact.
In addition, during the last quarter, shipments were affected by a 13-day closure of the Bogota - Medellin highway, due to a significant landslide a few kilometers from the Rioclaro Plant. The market also suffered restrictions on deliveries as a result of social protests in late November and early December in the main cities of Colombia. In this context, cement volumes in the region reached 5 million tons, with a variation of -3 percent and those of concrete reached 2.7 million cubic meters, with a variation of-5.3 percent in comparison to the closure of 2018.
In turn, revenues closed at 2.3 trillion Colombian pesos, increasing 3.8 percent year-over-year and Ebitda approached 522 billion pesos, an increase of more than 20%.
The Colombian market continues to show a positive growth trend. Important infrastructure, housing and commercial buildings projects continue to drive the development of the sector.
- In the Caribbean and Central America Region, the company faced significant challenges due to the short-term difficulties facing the economies of Honduras and Panama but managed to compensate to some extent the impact on the results with the growth of exports and the good performance of operations in the Dominican Republic and Haiti.
In 2019, cement volumes reached 4.9 million tons and concrete volumes reached 349,000 cubic meters, with year-to-year variations of -5.4 percent and-15.4 percent, respectively.
Consolidated revenues were 535 million dollars, decreasing 9.7% and Ebitda registered 147 million dollars, with a variation of -17.6%. Despite the previous results, which reflect the short-term challenges faced in Panama and Honduras, the region remains the most profitable for the company in terms of Ebitda margin and return on capital employed.
At the forefront of the industry
We remain at the forefront of the industry in digitalization, innovation and sustainability issues. With Argos One, we manage 65 percent of cement orders and 41 percent of concrete orders in Colombia. In the consolidated report of the 3 regions, 56 percent of cement orders were handled online, self-managed by customers, making it more than 2.4 million tons
Additionally, in 2019 the Thermally Activated Clays project was completed at the Rioclaro plant in Colombia, which allows for production and distribution of Green Cement to begin and where the use of clinker is greatly reduced, 38 percent less of CO2 emissions and 30 percent in energy consumption.
Due to its comprehensive performance in terms of economic, environmental and social sustainability, Argos was included in 2019, for the seventh consecutive year, in the Dow Jones Global Sustainability Index (DJSI), as one of the most sustainable cement companies in the world and achieved the maximum recognition in the 2020 RobecoSAM firm Sustainability Yearbook: the Gold Class Award.