Cementos Argos is a multinational building materials producer. The firm has presence in 15 countries and has more than 265 concrete plants, which are all spread across the American continent. Cementos Argos is considered one of the most important firms in the materials sector, being the construction leader in Colombia and a household name in the U.S.
As it is well known, those firms that have businesses within the construction sector behave more like the economic cycle than those that do not. This means that when the economy begins to experience a stage of recession or depression, the construction firms experience significant impacts. However, when the economy is at the recovery or the peak stage, these firms experienced an accelerated growth.
Even though the global economy is not entirely recovered, it presents some signs of improvement. Hence, it is no surprise that Cementos Argos has been experiencing a strong recovery from last year.
In this quarter, Cementos Argos’s revenues amounted to 2.4 trillion Colombian pesos, reflecting an improvement of 15.9% vis-á-vis the same period last year. Accumulated revenues for the semester reached a total of 4.7 trillion, translating into an increase of 11.0% in comparison to the prior-year semester. The improvement reflects the increasing demand of the residential and commercial sectors. In the same way, the advance is also explained by the increasing demand in most regions, translating into higher prices and therefore higher revenues.
The U.S Region
During the second quarter of 2021, cement volumes in the U.S recorded an increase of 8.1% compared to the prior-year semester, reflecting the positive market dynamics in the country. On the other hand, Ready mix volumes experienced a decrease of 13.1%.
The U.S economy continued recovering and indicators such as building licenses and housing starts reflected the advance, increasing by 38% and 45% respectively.
Colombia Region
Despite the political and social demonstrations, the results in this region showed an improvement in comparison to the last year. Cement volumes increased 74% versus 2Q20 and compared to 2Q19, when it only reduced 7%. In contrast to the U.S, cement prices in Colombia experienced a reduction of 0.2% and 2% in ready-mix.
The Caribbean and Central America Region
In this quarter, the CCA region presented a significant recovery from last year. Countries such as Dominican Republic, Puerto Rico, and Honduras continued exhibiting an increasing demand essentially due to remittances and the reconstructions funds. Cement volumes not only experienced a significant recovery from 2020, increasing by 73.3%, but cement volumes also had a better performance than in 2Q19, rising by 31.9%.
As in the U.S, the CCA region exhibited an increase in cement prices, growing by 1% YOY.
As a whole, the firm reported strong results in its most important concepts.
As was previously mentioned, most of the regions where the firm has presence experienced a strong quarter; therefore, consolidated adjusted EBITDA amounted to COP 522 billion, representing an advance of 25.9% compared to the same period last year. Likewise, accumulated adjusted EBITDA 6M totaled COP 967 billion, which translates into an increase of 27.7% in comparison to the prior-year semester.
EBITDA margin ended up at 28.1%, translating into an increase of 8.7 percentage points set against the same quarter last year. This figure is the highest recorded for a quarter since 2013.
According to the firm, net income reached a total of COP 164 billion, representing an increase of 1320.1%. Of course, this large number essentially reflects the recovery from last year. As is to be expected, accumulated net income also reflected this improvement.
Finally, Net debt to EBITDA ratio plus dividends stood at 3.1 x, representing the lowest in 8 years.
The firm’s landscape seems good, especially due to its strong presence in the United States.
With the announcement of the bipartisan bill, which is to assign USD 110 Billion to fund roads and bridges, the firm has a unique opportunity to get on board and skyrocket its revenues.
