Cementos Argos released its financial results for the second quarter of 2018. The company saw revenues advance by 1.4 percent to COP 2.184 billion ($723 million) compared to the prior-year period. Operating EBITDA fell by 11.2 percent to COP 328 billion ($108.6 million) in the second quarter compared to the same period in 2017.
Consolidated cement and ready-mix ed volumes increased 0.9 percent and 1 percent respectively, on a year-over-year basis. These results reflect the challenging conditions of the Colombian market that were partially offset by the performance of the U.S. market, in which the company observes positive signs, especially in the ready-mixed business.
Adjusted EBITDA, excluding the payment of the fine imposed by the Superintendence of Industry and Commerce in Colombia, closed in COP 404 billion ($133.8 million), 5.9 percent more compared with the same period of 2017. The EBITDA margin was 18.5 percent, with a 77.9 basis points yearly expansion.
“The results for this quarter show the massive effort for cost discipline as part of our BEST program in all regional divisions but especially in Colombia where, as long as the demand continues to be slower than our expectations, we have to double up on any effort to make sure that we continue improving profitability,” said Juan Esteban Calle, CEO of Cementos Argos. “For the second half of the year, we expect to remain on budget in the U.S.; to see improvements in the demand side in Colombia, benefiting from a more stable political environment that is boosting consumer confidence; and to continue experiencing stable results from Central America and the Caribbean where Puerto Rico and the eastern Caribbean operations are compensating the slower demand that we are facing in Panama.”
In the United States, cement and RMC dispatches increased 3.2 percent and 4.2 percent, respectively, driven mainly by the growth in the cement market in Florida, the Carolinas and the Mid-Atlantic region, and positive results in the ready-mixed business in the South-Central zone.
The outlook for the cement and concrete market in the United States for the rest of the year remains positive, supported by economic fundamentals such as consumer confidence that is at levels not seen since 2004, and unemployment, which closed at 4 percent, the minimum since 2008. Additionally, the growth trend in the residential segment is expected to continue due to the positive dynamic seen in building permits and housing starts as of June (+7 percent and +5 percent, respectively).
Cement volumes in Colombia decreased 2.1 percent, reflecting a slower than expected market and an impact of the price recovery strategy. RMC volumes decreased 3.1 percent.
Cement volumes in the Caribbean and Central America region increased 1.1 percent. A 30-day construction strike in Panama was offset by a 3 percent cement volume expansion in Honduras and a notable performance of countries in the Eastern Caribbean such as Haiti (+29 percent), Dominican Republic (+14 percent) and Puerto Rico (+16 percent).
The outlook for Honduras is still positive considering the GDP growth year over year and an increase in foreign direct investment and remittances, which Cementos Argos expects to continue growing given the positive dynamic of the labor market in the U.S.
In Puerto Rico, the cement market will benefit from a recently announced post-hurricane plan that has an estimated investment of $400 million over the next four years, noted the company.