Cementos Argos Corporate presentation June, 2019
Growing multinational, producer of building materials with focus on value creation Value generation by Segmented value proposition The best footprint 3 1 2 for market differentiation in the Americas closing efficiency gaps: BEST program Healthy financial position Successful track-record deploying 4 5 and flexibility to pursue growth a disciplined expansion strategy
The best footprint in the Americas
Interconnected footprint to maximize value generation ▪ Logistic synergies ▪ Balance between emerging and developed economies ▪ Markets with high growth potential ▪ Negative correlation between economic cycles 30% RMX; 41% 26% 45% Cement; 59% Revenues by Revenues by Operating EBITDA by region* segment* region* 17.3M M 3 USA 23M MT Colombia RMC installed Cement installed capacity capacity Caribbean and Central America *LTM figures, EBITDA without IFRS 16
Our Footprint USA Region 12.3 M m3 9.6 M MT 74% 42% Cement capacity RMC capacity 13 Cement +312 RMC plants plants Colombia Region 3.8 M m3 8.6 M MT 38% 22% Cement capacity RMC capacity 9 Grinding 33 Ports facilities & terminals 1st cement, concrete, and aggregates producer Caribbean and Central America Region +2.480 1.405 Mixers Rail cars 0.9 M m3 4.7 M MT 20% 5% Cement capacity RMC capacity 1 of the 2 leading producers in the region *LTM figures
US Region: Recovery drives operational growth and EBITDA margin normalization 2Q19 Revenues 2Q19 EBITDA* 2Q19 EBITDA margin* USD 407 M USD 79.6 M 19.5% Strategic location close to growing demand centers Leadership , with relevant market share Focus on urban centers in RMC business Interconnected and privileged assets network: 1.274 rail cars 36% cement sales to RMC operations Imports potential: Cement plants RMC plants 9 Ports 5.5 M Tons capacity Grinding facilities Ports/Terminals Value generation through innovation 15 VASP** and/or LEED products 13M M 3 Installed 9.6M MT Cement RMC Capacity *EBITDA and EBITDA margin under IFRS 16 **Value Added Specialized Products Commercial Infrastructure Residential Construction Positive momentum in the Plans at state level Positive macro fundamentals segment with more relative materializing and reduction in interest rates drivers importance for Argos maintains market stability Evident infrastructure needs 6
COLOMBIA Region: National coverage offers a strong competitive advantage to capture infrastructure and housing growth 2Q19 Revenues 2Q19 EBITDA* 2Q19 EBITDA margin 7 Cement plants COP 113.9 Bn COP 566.5 Bn 20.1% 48 RMC plants 1 Port Leaders with more than 80 years of history and broad presence Multi-plant player, present across the country with the best logistic interconnection +9,000 clients in retail segment Presence in 801 municipalities ( 71% of the total territory) 15% of the country’s load is mobilized by Argos +5,700 hardware stores trust us Differentiated value proposition for the industrial and retail segment Efficiency and competitiveness Reduction of more USD 12/MT in 2017 through BEST Installed Capacity 30% of revenues generated by innovative products in 2018 Cement plants 3.8M M 3 RMC plants 8.7M MT Ports/ Terminals Cement RMC *Operating EBITDA y EBITDA margin under IFRS 16 Infrastructure drives Government strategies seek to boost the Reduced imports and macro construction for Argos social housing and reduce inventory stability support price recovery strongest segment levels in regular housing segment
Caribbean and Central America Region: Presence in diversified markets offers flexibility 2Q19 Revenues 2Q19 EBITDA* 2Q19 EBITDA margin USD 142.7 M USD 39 M 27.3% Tailor made business model Trading and vertical integration through the Caribbean Sea 47% market share in clinker and cement trading Transport synergies through an interconnected network of ports, terminals and grinding facilities 11 puertos y terminales Installed Capacity Logistic flexibility 4.7M MT 0.9M M3 RMC Supply to the Region from plant in Cartagena Cement Region with the highest ROCE (double digit) Cement plants RMC plants Grinding facilities Ports/Terminals *EBITDA y EBITDA margin under IFRS 16 Positive moment of the market in Dominican Republic: Puerto Rico Reconstruction Plan underway: 5.9% Feb-19 USD 20 Bn Growth economic activity year to day Funds approved in 1Q19 for reconstruction. 7% of GDP growth in 2018 Reconstruction needs estimated at USD 139 Bn 8 Sources: Banco Central de la República Dominicana, US Department of Housing and Urban Development
Value generation through efficiency: BEST Program
BEST Building efficiency and Reduction of Operational Clinker to Alternative Administrative sustainability for tomorrow transformation cement ratio fuels synergies non core assets Improve ROCE Leaner and faster Cost champions Customer centered Sustainability leaders 10
BEST: Optimization of our assets base as a growth lever Goals: Reduce leverage: 3.2x Net debt / EBITDA + dividends by June 2020 ▪ Increase the operating free cash flow ▪ Fire power to grow ▪ ROCE improvement ▪ Focus on core assets What have we done? +USD 530M divestments What are we doing?: ▪ Working capital optimization ▪ Capex optimization ▪ Additional divestments of non-core assets ▪ Growth through allies (Eg. Agregados Argos) 11
BEST: Next steps BEST USA 2.0 Building Efficiency and Sustainability for Tomorrow Cement: Improvement of Energetics capacity utilization Supply chain & logistics Logistics RMC Network & Drivers shortage Fleet optimization 12
Segmented value proposition for market differentiation
Differentiated value proposition Value added for our customers + + Customer ally Recognized brand Privileged and interconnected network of assets Industrial Segment Retail Segment Experience and track record Customer centric +80 years of experience Constant focus on our customers needs Technical Know-how Knowledge transference Constant training to our customers and suppliers Participation on emblematic projects in the Americas Tailor-made service Accessibility Tailor-made products and processes Presence in +15 countries, 14 states in the USA and +800 municipalities in Colombia Innovative products Quality Microcement, advanced concrete, among others High quality product portfolio Confidence and backup Reputation Technical experts in high complexity projects DJSI and Merco Colombia supports our trajectory, responsibility and commitment 14
Argos, at the forefront of the industry´s digital revolution. ...contributing to the productivity of our customers projects v ▪ Self service from beginning to end ▪ Make online orders ▪ Track the delivery of orders ▪ Generate quality reports ▪ Visualize historical transactions ▪ Make online payments
Successful track-record deploying a disciplined growth strategy
Disciplined growth strategy Boosting the EBITDA growth and value generation Revenue (COP billion) EBITDA* (COP billion) 1.672 1.519 5.000 1.486 800 1.481 4.500 700 8.517 8.533 8.418 7.912 4.000 600 3.500 328 978 968 405 2.350 5817 500 3.000 2.184 791 4968 4380 2.500 400 2.000 300 1.500 19,7% 19,2% 19,4% 18,1% 17,7% 17,2% 371 16,6% 200 322 2.175 1.000 1.907 100 500 - - 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 2018 2019 2018 2019 USD M 2,437 2,656 2,833 2,881 2,790 2,892 2,848 USD M 385 447 524 484 553 547 482 1Q 2Q 1Q 2Q Note: COLGAAP figures 2010-2013, IFRS figures 2014-2018 *2Q18 EBITDA w/o IFRS 16: Includes the payment of the COP 73,772 M fine imposed by the SIC in April 2018 Organic growth Acquisitions Focus and reorganization 13% Puerto Rico USD 8 M Cartagena USD 560M +USD 4.3Bn CAGR revenues West Virginia USD 660 M Rioclaro USD 93M ▪ 2005: Merge of 8 cement companies in Puerto Rico terminal USD 18 M 2012-2018 Energy plants in Colombia USD 68M Colombia invested in the last French Guiana USD 69 M Panama grinding facility expansion USD 65M ▪ 2012: Non-cement assets spin-off + Vulcan FL USD 720 M + 9% 10 years Harleyville VCM USD 58M Lafarge Honduras USD 305 M ▪ 2016: BEST as a program to maximize Cartagena´s distribution center USD 35M Lafarge USA USD 760 M (organic and inorganic) competitivity Holcim Caribbean USD 157 M White cement conversion USD 23M CAGR EBITDA RMCC USA USD 243 M Oil-well cement development USD 1M 2012-2018 Cemento Andino USD 192 M SSC USA USD 245 M 17
Track record of successfully implementing a disciplined growth strategy WV, USA – Heidelberg (2016) USD 660M Cement Plant 2.2 M MT Terminals 8 Florida, USA – Vulcan Cement Investment (2014) USA – Lafarge (2011) USD 720M USD 760M Cement Plant 1.6 M MT Cement Plant 2 Grinding facilities 1.9 M MT Grinding facilities 1 RMX 3.3 M m3 RMX 79 plants Ports 2 Ports & terminals 6 Blocks 109 M units / year Puerto Rico 2015: USD18.3M 2017: USD 8M (60% ownership) (60% ownership) Cement Plant Port 0.6 M MT Honduras – Lafarge (2013) €231 M (53% ownership) Cement Plant 1.0 M MT Grinding facility 0.3 M m 3 French Guiana – Lafarge (2014) €50M USA (100% ownership) Colombia Grinding Facility 0.2 M MT Port concession Caribbean and Central America
Healthy financial position and flexibility to pursue growth
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