Cementos Argos' 4Q16 results boosted by US operations

Cementos Argos' 4Q16 results boosted by US operations
27 February 2017

Cementos Argos has announced that its 4Q16 results saw an 8.7 per cent rise in EBITDA and 70 per cent of its revenues was generated from operations outside of its domestic market of Colombia.

Group dispatched volumes of cement and ready-mix were down by 5.5 per cent and 6.5 per cent, respectively in the 4Q16. Consolidated EBITDA was COP396bn (US$137m), achieving an EBITDA margin of 19.7 per cent. Net income amounted to COP27bn.

The group's US operations reported an EBITDA of US181m. Cement volumes in the US region rose by 13.6 per cent, representing nearly 1Mt of cement. Cement sales in the US included one month of operations from the 2.2Mta Martinsburg cement plant, which was formerly acquired from Essroc along with eight terminals in December 2016.

The US ready-mix operations sold 1.8Mm3, a decrease of 1.9 per cent compared to 4Q15, which was mainly due to results in Texas. In 2016 the group's ready-mix dispatches totalled 7.6Mm3, an increase of 2.9 per cent YoY.

The market for cement was much more challenging in Colombia where cement dispatches in the country fell by 9.5 per cent over the year, according to the National Administrative Department of Statistics (DANE).

Argos' cement volumes in Colombia in 4Q16 reached 1.274Mt down by 22.2 per cent on the 1.637Mt in 4Q15. In 2016 Cementos Argos sold 5.05Mt of cement in Colombia, down 3.6 per cent on the 5.24Mt recorded in 2015.

Cementos Argos has also reported that it will postpone the expansion of its Sogamoso plant in favour of increasing capacity at the Rioclara and Cartagena plants during 2017-18. The project at Cartagena will involve reducing the clinker-to-cement ratio and will be accomplished with a capital expenditure below US$120/t, the company states.

Caribbean and Central America
Despite the hard domestic market environment, Cementos Argos sold 1.2Mt of cement in the Caribbean and Central region in the 4Q16, 4.1 per cent up on the 4Q15. Growth was driven by a 13.6 per cent increase in Honduras and positive trading (11.8 per cent) and exports (9.7 per cent), which offset results elsewhere. In ready-mix volumes expanded by 5.4 per cent in 4Q16.

In the 4Q16 Honduras and Panama offered attractive margins of 51 and 37 per cent, respectively.

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