BUENOS AIRES, ARGENTINA / ACCESSWIRE / August 9, 2023 / Loma Negra, (NYSE:LOMA, Financial)(BYMA:LOMA), ("Loma Negra" or the "Company"), the leading cement producer in Argentina, today announced results for the three-month period ended June 30, 2023 (our "2Q23 Results").
2Q23 Key Highlights
Net sales revenues decreased by 6.5% YoY to Ps. 50,911 million (US$ 206 million), mainly explained by a top line decrease of the Cement and Railroad segments, partially compensated by the good performance of Concrete and Aggregates.Consolidated Adjusted EBITDA reached Ps. 11,670 million, decreasing 26.1% YoY in adjusted pesos, while in dollars it reached 63 million, flat from 2Q22.The Consolidated Adjusted EBITDA margin stood at 22.9%, contracting 608 basis points YoY from 29.0%.Net Profit of Ps. 2,443 million, showing a reduction of 53.0% versus the same period of the previous year, mainly explained by the decrease in the operating result and a higher financial cost.During the quarter, the Company announced two dividend payment for the total amount of Ps. 35,900 million, Ps. 61.53 per outstanding share (Ps. 307.64 per ADR).The Company issued its Class 2 of domestic bonds in the total principal amount of US$ 71.7 million with maturity in December 2025.Net Debt /LTM Adjusted EBITDA ratio of 0.82x compared with 0.37x in FY22.The Company has presented certain financial figures, Table 1b and Table 11, in U.S. dollars and Pesos without giving effect to IAS 29. The Company has prepared all other financial information herein by applying IAS 29.
Commenting on the financial and operating performance for the second quarter of 2023, Sergio Faifman, Loma Negra's Chief Executive Officer, noted
: "I'm very pleased to present our results for the second quarter, where the cements industry showed its resilience, maintaining solid levels of shipments; in a period of scaling uncertainties driven by the upcoming presidential election coupled by a lower level of activity for the economy.In the first six months of the year, the industry set a record high, while the second quarter, even showing a slight decrease year on year, still shows solid level of shipments.
On the operational and financial side, Loma keeps on delivering robust results which then imply strong value return for our shareholders. In this sense, this quarter we announced two dividend payments, that adding the one we distributed in January, sums the total amount of approximately 120 million dollars, representing a dividend yield of approximately 16%."
| Table 1: Financial Highlights | |||||||
| (amounts expressed in millions of pesos, unless otherwise noted) | |||||||
| Three-months ended June 30, | Six-months ended June 30, | ||||||
| 2023 | 2022 | % Chg. | 2023 | 2022 | % Chg. | ||
| Net revenue | 50,911 | 54,474 | -6.5% | 101,154 | 103,304 | -2.1% | |
| Gross Profit | 12,067 | 15,292 | -21.1% | 25,861 | 31,585 | -18.1% | |
| Gross Profit margin | 23.7% | 28.1% | -437 bps | 25.6% | 30.6% | -501 bps | |
| Adjusted EBITDA | 11,670 | 15,797 | -26.1% | 24,834 | 32,195 | -22.9% | |
| Adjusted EBITDA Mg. | 22.9% | 29.0% | -608 bps | 24.6% | 31.2% | -661 bps | |
| Net Profit (Loss) | 2,443 | 5,203 | -53.0% | 8,889 | 13,128 | -32.3% | |
| Net Profit (Loss) attributable to owners of the Company | 2,544 | 5,366 | -52.6% | 9,070 | 13,378 | -32.2% | |
| EPS | 4.3606 | 9.1657 | -52.4% | 15.5435 | 21.5878 | -28.0% | |
| Average outstanding shares (*) | 583 | 585 | -0.3% | 584 | 586 | -0.4% | |
| Net Debt | 47,651 | 657 | 7148.7% | 47,651 | 657 | 7148.7% | |
| Net Debt /LTM Adjusted EBITDA | 0.82x | 0.01x | 81.82x | 0.82x | 0.01x | 81.82x | |
| (*) Net of shares repurchased | |||||||
| Table 1b: Financial Highlights in Ps and in U.S. dollars (figures exclude the impact of IAS 29) | |||||||
| In million Ps. | Three-months ended June 30, | Six-months ended June 30, | |||||
| 2023 | 2022 | % Chg. | 2023 | 2022 | % Chg. | ||
| Net revenue | 47,913 | 24,064 | 99.1% | 85,868 | 42,327 | 102.9% | |
| Adjusted EBITDA | 14,580 | 7,409 | 96.8% | 26,698 | 13,752 | 94.1% | |
| Adjusted EBITDA Mg. | 30.4% | 30.8% | -36 bps | 31.1% | 32.5% | -140 bps | |
| Net Profit (Loss) | 5,834 | 6,554 | -11.0% | 13,237 | 12,597 | 5.1% | |
| Net Debt | 47,651 | 657 | 7148.7% | 47,651 | 657 | 7148.7% | |
| Net Debt /LTM Adjusted EBITDA | 0.82x | 0.01x | 81.82x | 0.82x | 0.01x | 81.82x | |
| In million US$ | Three-months ended June 30, | Six-months ended June 30, | |||||
| 2023 | 2022 | % Chg. | 2023 | 2022 | % Chg. | ||
| Ps./US$, av | 232.71 | 118.03 | 97.2% | 211.91 | 112.21 | 88.8% | |
| Ps./US$, eop | 256.68 | 125.22 | 105.0% | 256.68 | 125.22 | 105.0% | |
| Net revenue | 206 | 204 | 1.0% | 405 | 377 | 7.4% | |
| Adjusted EBITDA | 63 | 63 | -0.2% | 126 | 123 | 2.8% | |
| Adjusted EBITDA Mg. | 30.4% | 30.8% | -36 bps | 31.1% | 32.5% | -140 bps | |
| Net Profit (Loss) | 25 | 56 | -54.9% | 62 | 112 | -44.4% | |
| Net Debt | 186 | 5 | 3436.2% | 186 | 5 | 3436.2% | |
| Net Debt /LTM Adjusted EBITDA | 0.82x | 0.01x | 81.82x | 0.82x | 0.01x | 81.82x | |
Overview of Operations
Sales Volumes
Table 2: Sales Volumes2 Three-months endedJune 30, Six-months ended
June 30, 20232022% Chg. 20232022% Chg.
Sales volumes of Cement, masonry, and lime during 2Q23 decreased by 3.6% to 1.6 million tons, mainly explained by a contraction in the bagged cement product of a decrease in the demand of the retail sector, partially compensated by a solid growth in the bulk dispatched mode, underpinned by a solid demand of Concrete mainly from private construction and small-scale public works.
Regarding the volume of the Concrete segment, it showed an increase of 14.8% YoY. The volume of concrete continues the upwards trend. The segment remains as one of the pillars of the growth in bulk cement shipments. The Concrete segment growth was mainly supported by demand from the small and medium scale public works such as urban pavement, and the private sector. On the other side, Aggregates segment showed a decrease of 8.3% YoY, mainly due to temporary operational challenges that affected the dispatches.
The volumes of the Railway segment experienced a contraction of 9.6% compared to the same quarter of 2022, primarily due to a decrease in the transported volumes of fracsand and aggregates. As the harvest was affected by the drought, the availability of trucks for freight in other segments increased, impacting the freight market.
Review of Financial Results
Table 3: Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Income(amounts expressed in millions of pesos, unless otherwise noted)June 30, Six-months ended
June 30,
Net Revenues
Net revenue
decreased 6.5% to Ps. 50,911 million in 2Q23, from Ps. 54,474 million in the comparable quarter last year, where the good top line performance of Concrete and Aggregates partially offset the decline in Cement and Railroad.Cement, masonry cement and lime segment was down 12.4% YoY, with volumes contracting 3.6% mainly due to a decline in the bagged cement sales, also affected by softer price dynamics that, even moving with inflation, showed a decrease due to higher monthly inflation figures and the price adjustments timing.
Concrete registered an increase in its topline of 26.6% compared with 2Q22, sustained by a 14.8% increase in volume, coupled with a significant improvement in prices. The Aggregates segment recorded an increase in revenues of 1.8%, supported by a positive price performance that more than compensated the decrease in sales volume of 8.3% YoY.
Railroad revenues decreased 13.4% in 2Q23 compared to the same quarter of 2022, where the transported volume decreased 9.6% in the quarter, affected by the decrease in transported volumes of fracsand and aggregates. The lower volumes of fracsand also affected the average price per ton, as is by far the product with longer average transported distance.
Cost of sales, and Gross profit
Cost of sales decreased 0.9% YoY, reaching Ps. 38,844 million in 2Q23, mainly due to the decrease in sales volumes of the Cement segment and the lower impact of depreciations in the Cement and Railroad segments, partially offset by higher sales volumes in Concrete. Regarding Cement cost of sales, the segment shows a decrease of 3% in per ton basis, was mainly because of lower depreciations and lower incidence of frights and packing and lower electrical energy inputs, partially offset by higher thermal energy and maintenance costs.
Gross Profit registered a decline of 21.1% YoY to Ps. 12,067 million in 2Q23, from Ps. 15,292 million in 2Q22, with a gross profit margin contraction of 437 basis points YoY to 23.7%.
Selling and Administrative Expenses
Selling and administrative expenses (SG&A) in 2Q23 remained almost flat, showing a slight increase of 0.7% YoY to Ps. 4,793 million, from Ps. 4,759 million in 2Q22, mainly due to an increase in salaries and marketing expenses, partially compensated with a decrease in freights, taxes and depreciation. As a percentage of sales, SG&A showed an increase against 2Q22 of 68 basis points, reaching 9.4%.
Adjusted EBITDA & Margin
Table 4: Adjusted EBITDA Reconciliation & Margin (amounts expressed in millions of pesos, unless otherwise noted) Three-months endedJune 30, Six-months ended
June 30, 20232022% Chg. 20232022% Chg.Adjusted EBITDA reconciliation: Net profit (Loss)2,4435,203-53.0% 8,88913,128-32.3%(+) Depreciation and amortization3,9815,314-25.1% 8,0099,963-19.6%(+) Tax on debits and credits to bank accounts61355011.3% 1,1501,03411.2%(+) Income tax expense1,6004,062-60.6% 3,7307,961-53.1%(+) Financial interest, net7,265(679)n/a 11,324(1,210)n/a(+) Exchange rate differences, net5,1854,23122.5% 9,0535,08578.0%(+) Other financial expenses, net72959522.5% 1,9081,21257.4%(+) Gain on net monetary position(10,146)(3,479)191.6% (19,227)(4,978)286.2%(+) Share of profit (loss) of associates--n/a --n/a(+) Impairment of property, plant and equipment--n/a --n/aAdjusted EBITDA11,67015,797-26.1% 24,83432,195-22.9%Adjusted EBITDA Margin22.9%29.0%-608 bps 24.6%31.2%-661 bps
Adjusted EBITDA
decreased 26.1% YoY in the second quarter of 2023 to Ps. 11,670 million from 15,797 million in the same period of the previous year, mainly affected by lower adjusted EBITDA generated by our cement business. The better performance of the Concrete segment compensated the decrease in the EBITDA generation of the other businesses.Likewise, the Adjusted EBITDA margin contracted 608 basis points to 22.9% compared to 29.0% in 2Q22, mainly due to the compression of the cement margin and the higher incidence in the top line of Concrete and Aggregates, both businesses with lower margins.
In particular, the Adjusted EBITDA margin of the Cement, Masonry and Lime segment contracted 536 bps to 27.1%, mainly due to lower price performance, where these, even while accompanying inflation, show a decrease due to high monthly inflation figures and the timing of price adjustments. This effect was coupled with lower sales volume, primarily in bagged cement, partially offset by a decrease in sales costs and SG&A.
Concrete Adjusted EBITDA margin expanded 580 bps, and stood at 2.7%, from negative 3.1% in 2Q22, underpinned by good performance in price and volumes, partially offset by the increase in costs, mainly impacted by aggregates and freights.
The Adjusted EBITDA margin of Aggregates contracted to 5.3%, from 9.7% in 2Q22, mainly due to lower volumes product of punctual operational issues that affected a better dilution of fixed costs offset by good price performance.
Finally, the Adjusted EBITDA margin of the Railroad segment contracted 262 bps to 0.8% in the second quarter, from 3.4% in 2Q22, principally affected by top line performance, which was negatively impacted by the mix of transported volumes, where the decrease in fracsand impacted the average transported distance.
Finance Costs-Net
| Table 5: Finance Gain (Cost), net | |||||||
| (amounts expressed in millions of pesos, unless otherwise noted) | |||||||
| Three-months ended June 30, | Six-months ended June 30, | ||||||
| 2023 | 2022 | % Chg. | 2023 | 2022 | % Chg. | ||
Exchange rate differences | (5,185) | (4,231) | 22.5% | (9,053) | (5,085) | 78.0% | |
Financial income | 941 | 1,206 | -22.0% | 2,550 | 2,000 | 27.5% | |
Financial expense | (8,935) | (1,122) | 696.7% | (15,782) | (2,002) | 688.3% | |
Gain on net monetary position | 10,146 | 3,479 | 191.6% | 19,227 | 4,978 | 286.2% | |
Total Finance Gain (Cost), Net | (3,033) | (668) | 354.2% | (3,056) | (109) | 2709.9% | |
During 2Q23, the Company reported a total net financial cost of Ps. 3.0 billion compared to a total net financial cost of Ps. 0.7 billion in 2Q22, mainly due to the increase of the net financial expense product of the increase of the debt position, coupled with the negative impact of the exchange rate differences. These variations were partially compensated by the positive effect of the net monetary position.
Net Profit and Net Profit Attributable to Owners of the Company
Net Gain
of Ps. 2,443 million in 2Q23 compared to a Net Gain of Ps. 5,203 million in the same period of the previous year, where the lower operational result and the higher financial cost was partially compensated by positive income tax effect.Net Gain Attributable to Owners of the Company stood at Ps. 2,544 million. During the quarter, the Company reported a gain per common share of Ps. 4.3606 and an ADR gain of Ps. 21.8031, compared to earnings per common share of Ps. 9.1657 and earnings per ADR of Ps. 45.8287 in 2Q23.
Capitalization
| Table 6: Capitalization and Debt Ratio | |||||
| (amounts expressed in millions of pesos, unless otherwise noted) | |||||
| As of June 30, | As of December, 31 | ||||
