Cementos Argos Reports First Quarter 2016 Financial Results

Transcription

1 Cementos Argos Reports First Quarter 2016 Financial Results Cementos Argos consolidated Ebitda increased 38% in the first quarter of the year May 13, 2016 Cementos Argos S.A. (Argos) is a geographically diverse rapidly growing cement and ready mix concrete (RMC) company with leading market positions in the US, Colombia, Caribbean & Central America (CCA) and total annual capacity of approximately 21M tons of cement and 18M m 3 of concrete. BVC: CEMARGOS, PFCEMARGOS ADR LEVEL 1: CMTOY / ADR 144A: CMTRY - Reg-S: CMTSY First Quarter Key Results Dispatched volumes up 6.4% Y-o-Y for cement and ready mix up 10.5% Consolidated revenues grew 33.9% Y-o-Y to COP 2.2 trillion 1. Consolidated EBITDA growth 38.4% Y-o-Y to COP 425 billion, achieving an EBITDA margin increasing 61.9 bps to 19%. Net income of COP 100 billion 27.1% increase Y-o-Y. Changes in our C-suite include Camilo Restrepo as our new VP for the Caribbean and Central America Regional Division and Lucas Moreno as our new VP of innovation The obtained results augur us a good performance for the 2016 and confirm us that the geographic diversification, expansion and consolidation of our businesses, the flexibility of our operations and the constant pursuit of the operational excellence of the company, will enable us to continue on a path of growth that drives the progress of the countries and the welfare of the communities of the territories where we operate. Juan Esteban Calle, CEO Cementos Argos Note: Figures under auditing process. 1 For the purpose of this report 1 billion = and 1 trillion =

2 Consolidated Results Key Figures Revenues COP Bn 1,653 2, % EBITDA COP Bn % EBITDA margin % 18.6% 19.2% 61.9 Net Income COP Bn % Net Margin % 4.8% 4.5% Var We will like to highlight the solid performance of the 16. Reported volumes across all regional divisions represent healthy dynamics in all the markets where we are present, especially in our operations in the US, where the cement dispatches increased 47%. For the 16, cement volume increased 6.4% totalizing 3.5 M MT. In the ready-mix segment, we sold 2.8 M m3, an increase of 10.5%. Additionally, we registered double digit growth in revenues, EBITDA and Net Income driven by margin expansions in all of our regional divisions, higher efficiencies as a result of our organizational excellence program, price recovery in Colombia and the continuing recuperation of the US market. Results per Regional Division Colombian Regional Division Volumes and market performance Volumes Var Cement 000 MT 1,484 1, % RMC 000 m % Dispatched cement volumes in 16 decreased 17%, reaching a total of 1.2 million metric tons. The Colombian National Administrative Department of Statistics (Departamento Administrativo Nacional de Estadística, DANE ) reported a contraction of 0.05% of the total

3 industry. Due to the different competitive dynamics of the market, Argos had lower volume growth in the central region. Nevertheless, we remain optimistic regarding the outlook for this market, which is expected to demand cement with the start-up of the 4G road infrastructure projects and Bogota s infrastructure plan proposed by the newly elected major, Peñalosa. In the ready-mix concrete business, we dispatched 801 thousand cubic meters, up 0.7%, as a result of an increase of residential construction offset by deceleration of civil works. Financial results Key Figures Revenues COP M 658, ,985 7, % EBITDA COP M 191, ,659 12, % EBITDA margin % 29.1% 30.7% Var Excellent results for the first quarter with increases in revenues by 1.2%, EBITDA by 6.8% and EBITDA margin by 160 bps. Results due to price improvements and the results of our organizational excellence program. First, we are now fully operational in the Rio Claro plant and in the Cartagena s dispatch center. Second, we have achieved better efficiencies such as the reduction by 5% of the caloric intake, stabilization of the reliability factor in Cartagena and Rio Claro above 96% and the increase of the use of additives for the production of cement. USA Regional Division Volumes and market performance Var Volumes Cement 000 MT % RMC 000 m 3 1,631 1, % Cement dispatches increased by 47.3%, reaching levels of 935 thousand metric tons during the quarter. This growth is due to a pent-up demand after difficult weather during the past year.

4 Our states once again surpassed the national growth cement dispatch average (15%) with a 28% average increase, led by the Carolinas with over 40%, Alabama 36% and Georgia 25%. In the ready-mix business, more than 1.9 million cubic meters were sold, increasing 16.7% when compared to 15. This due to a better weather reflected in 75% of good days / business days in the quarter. Financial results Var Key Figures Revenues USD M % EBITDA USD M % EBITDA margin % 5.4% 10.1% We registered revenues for USD 335 million during 16, increasing by 26.9%, reflecting the US come back. During the 16, EBITDA increased by 140.3%, reaching USD 34 million, supported on operational leverage. The EBITDA margin for the period was 10%, which represents approximately 479 additional basis points when compared to the 15. Caribbean and Central American Regional Division Volumes and market performance Var Volumes Cement 000 MT 1,119 1, % RMC 000 m %

5 We commercialized nearly 1,281 thousand metric tons of cement in 16 increasing by 14.4%, driven mainly by the performance of the Eastern Caribbean operations and the results of the trading and exports business. In Panama, we continue to increase our market share, in a country with a slow market recovery explained by delay in starting up of public projects and the slowing of the construction permits granting. We expect a positive perspective for year-end 2016 in this country, driven by the Government investments of approximately USD3.5 Bn to be invested in infrastructure and social housing. Volumes for the ready-mix concrete business reached levels of 102 thousand cubic meters, 9.3% below those in 15. Financial results Var Key Figures Revenues USD M % EBITDA USD M % EBITDA margin % 32.9% 35.3% We registered revenues of USD 139 million, increasing by 3.7% when compared to the same period of The EBITDA generated in 2016 by this regional division reached USD 49 million, which represent an increase of 11.3%. EBITDA margin for the period was 35%, bps above the result obtained during 2015, which proofs a high return on capital and the efficient logistical interconnections in the region. The results for the year reflect the healthy performance of the Honduras operation and the achievements obtained through our organizational excellence program such as an increase in 10% of the reliability factor, a savings of 4% in the energy consumption, improvements of 300 bps in our Clinker-to-cement ratio and the increment in 60 bps in the use of alternative fuels. Additionally in Panama, our operational costs dropped by 2% and our Clinker-to-cement ratio improved by 400 bps.

6 Summary of Results Below, a summary is presented of the main consolidated figures per regional division, as of March 31 st, 2016: COP Bn Colombia USA Caribbean & CA Subtotal Corporate Other Businesses Consolidated Result Revenues EBITDA Var (%) 2015 Mgn (%) 2016 Mgn (%) Var (%) % % % 6.8% 651 1, % % % 217.5% % % % 47.0% 1,641 2, % % % 41.8% 0 0 N/A N/A -47.3% % % % % 1,653 2, % % % 38.4% USD million Colombia USA Caribbean & CA Corp. & other buss Consolidated Result USD % % % -19.2% % % % 140.3% % % % 11.3% % % % -35.1% % % % 4.7% Note: All figures under IFRS

7 Cash Flow as of March 31 st, 2016 (COP Billion 2 ): Cash Flow at Jan EBITDA Net Op. Working Capital Maintenance CAPEX Strategic CAPEX Taxes Net Financial Expenses Net Dividends Net Other Non-Operating Net Financial Op. Acquisitions Exchange rate effect Cash Flow at March For the purpose of this report 1 billion = and 1 trillion =

8 Investment Portfolio as of March 31 st, : Company % Stake Price per Share (COP) Value (COP$ million)* Value (US$ million)* Grupo Suramericana 6.0% 39,900 1,124, Bancolombia 4.0% 24, , Cartón Colombia 2.1% 4,520 10,436 3 Total 1,639, * FX Rate as of March 31 st, 2016: COP 3, / USD Indebtedness and coverage Ratios *: As of March 31 st, 2016, Cementos Argos consolidated financial debt rose to USD 1,853 million, of which 39% was denominated in Colombian pesos and 61% in US dollars. The average annual cost of debt in Colombian pesos closed at 11.3%, while in US dollars was of 2.7%. On a consolidated basis, as of March 2016, the debt coverage ratios continue to show adequate levels: Net Debt / EBITDA + Dividends registered a value of 3.10x and the EBITDA / Financial Expenses ratio closed at 5.00x. * Note: For Net debt to EBITDA + Dividends ratio, Net debt and EBITDA are calculated with the same FX rate (since 15) 3 The variations of the non-cement investment portfolio do not affect the income statement of Cementos Argos, but they do have an effect on the figures of the general balance sheet, through the account of valuations and depreciations. All of these companies periodically report their results, for which there is no detailed information about them in this report.

9 CEMENTOS ARGOS S.A. Consolidated Statement of Income COP million or USD million March 2016 March 2015 Variation Continuing operations Revenue $ 2,212,871 $ 1,652, Cost of sales 1,707,715 1,309, Cost of sales 1,576,211 1,189, Depreciation and amortization 131, , Gross income $ 505,156 $ 343, Administrative expenses 157, , Selling expenses 54,324 53, Depreciation and amortization 31,292 19, Other income (expense), net 404 1,919 (78.9) Depreciation and amortization non-operating assets Asset and goodw ill impairment Operating income $ 262,202 $ 166, Financial expenses 53,645 46, Foreing currency exchange (761) 22,156 (103.4) Share of profit of associates and joint ventures (478) - - Other income (expense), net Income before income tax $ 207,318 $ 142, Income tax expense 84,814 49, Income from continuing operations $ 122,504 $ 93, Net income (loss) from discontinued operations Net consolidated income $ 122,504 $ 93, Attributable to: Ow ners of the parent company 100,340 78, Non-controlling interests 22,164 14, Net consolidated income $ 122,504 $ 93, Additional Information: Gross margin 22.8% 20.8% Operating margin 11.8% 10.10% Net margin 4.5% 4.8% Operating EBITDA 425, ,229 EBITDA margin 19.2% 18.6%

10 CEMENTOS ARGOS S.A. Consolidated Statement of Financial Position COP million or USD million March 2016 December 2015 Variation % ASSETS CURRENT ASSETS Cash and cash equivalents $ 480,029 $ 545, Derivative instruments 17,830 22, Other financial assets 43,529 3,676 1, Trade and other accounts receivable, net 1,204,188 1,071, Current tax assets 256, , Inventories, net 737, , Prepaid expenses 74,300 64, Non-current assets held for sale 11,314 10, Total current assets $ 2,824,580 $ 2,724, NON-CURRENT ASSETS Other non-current accounts receivable 37,113 35,628 4 Investments in associates and joint ventures 81,616 81,857 (0) Derivatives financial instruments (100) Other financial assets 1,662,968 1,466, Other intangible assets, net 1,140,723 1,202, Biological assets 20,242 20, Property, plant and equipment, net 9,113,139 9,373, Investment property 151, , Goodw ill 1,758,643 1,836, Deferred tax assets 524, , Prepaid expenses and other non-current assets 2,135 2, Total non-current assets $ 14,492,544 $ 14,722, TOTAL ASSETS $ 17,317,124 $ 17,446, USD DOLLARS 5,730 5, LIABILITIES CURRENT LIABILITIES Financial liabilities 1,241,161 1,186, Trade and other payables 1,206, , Tax payables 348, , Employee benefits 145, , Provisions 75,747 86, Other financial liabilities 43,142 45, Derivative instruments 6, Bonds and other instruments 436, , Income received in advance and other liabilities 128, , Liabilities associated to non-current assets held for sale Current liabilities $ 3,632,667 $ 3,356, NON-CURRENT LIABILITIES Financial liabilities 2,147,073 2,243, Trade and other payables 17,318 10, Employee benefits 240, , Other financial liabilities Derivative instruments 135, , Tax payables Provisions 195, , Bonds and other instruments 1,812,372 1,822, Other liabilities 22,018 8, Deferred tax 645, , Non-current liabilities $ 5,216,972 $ 5,352, LIABILITIES $ 8,849,639 $ 8,709, USD DOLLARS 2,928 2, SHAREHOLDERS EQUITY $ 7,912,428 $ 8,105, Non-controlling interest 555, , SHAREHOLDERS EQUITY $ 8,467,485 $ 8,737, USD DOLLARS 2,802 2, LIABILITIES AND SHAREHOLDERS' EQUITY $ 17,317,124 $ 17,446,

11 Results Conference Call Information The conference call to discuss 16 results will be held Friday, May 13 th, 2016 at 8:00 a.m. Colombia Time (9:00 am Eastern Time). Conference ID #: Telephone numbers: United States / Canada: (866) Colombia: UK Toll-Free: International (outside U.S): (706) results presentation and report are available from today Thursday, May 12v e, 2016 at Cementos Argos Investor Relations website: IR Cementos Argos Contact Information Manuela Ramirez - IRO mramirezm@argos.com.co Ana Catalina Castaño - IR Leader acastanol@argos.com.co