Votorantim Cimentos recorded global net revenue of R$3.9 billion in the second quarter of 2020, an increase of 18% as compared to the same period in 2019. The growth is mainly due to the positive effect of the depreciation of the real against the dollar, solid results in North America, and better sales volumes in Brazil.
Consolidated adjusted EBITDA was R$735 million in the second quarter of 2020, 50% higher than the prior-year period, with an EBITDA margin of 19%.
The company’s geographic diversity also helped the results, since impacts of the novel coronavirus pandemic were felt at different times and at different intensities in each country. As of mid-March, measures induced by COVID-19, such as social distancing and restrictions to economic activity, impacted cement sales in all regions where the company operates, albeit to different extents.
In Brazil, the company maintained positive dynamics and recorded net revenue of R$1.8 billion, with 9% growth compared to the second quarter of 2019. Adjusted EBITDA in the period was R$254 million, a growth of 233% in comparison to the prior-year period, mainly due to cost reductions resulting from the COVID-19 pandemic contingency plan, in addition to the improved performance of adjacent products and better sales volume.
“Market conditions in Brazil were less challenging than initially expected in the first half of 2020, considering the coronavirus pandemic. We continue to exercise financial discipline and to manage the company’s debt profile conservatively. Our average debt maturity is over eight years and we have high cash liquidity, which puts us in a strong position to face the volatility and uncertainty arising from these turbulent times,” said Osvaldo Ayres Filho, Votorantim Cimentos’ global CFO.
The dynamics of the cement market in the United States and Canada were also positive during the first half of 2020, driven by favorable weather conditions and a lower impact of restrictions resulting from the pandemic in the regions where Votorantim Cimentos operates.
In North America, net revenue was R$1.5 billion in the second quarter of 2020, an increase of 40% over the prior-year period, mainly due to the devaluation of the real against the dollar, lower-than-expected impact of the pandemic in the civil construction sector, and steady market demand. Adjusted EBITDA in the quarter was R$387 million, an increase of 33%.
In Latin America, the evolution of the pandemic in Uruguay was milder than in its neighboring countries, and the country did not have to interrupt its economic activities. As a result, Votorantim Cimentos maintained the regularity of its operations in the country and benefited from local market factors in the second quarter. On the other hand, in Bolivia, the company was forced to freeze its operation for two months due to the pandemic, which had a direct impact on sales volume.
Net revenue in Latin America and other regions was R$145 million in the second quarter, down 6%. The market in Bolivia faced a challenging environment with the total interruption of economic activities starting at the end of March. This impact was partially mitigated by the strong operating performance in Uruguay. Adjusted EBITDA grew by 16%, to R$27 million.