1Q18 Results Cementos Argos Argos present in 4G projects, Viaducto - - PowerPoint PPT Presentation

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1Q18 Results Cementos Argos Argos present in 4G projects, Viaducto - - PowerPoint PPT Presentation

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1Q18 Results Cementos Argos Argos present in 4G projects, Viaducto del Gran Manglar, Colombia DISCLAIMER DISCLAIMER This document contains forward-looking statements and information related to Cementos Argos S.A. and its subsidiaries

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Argos present in 4G projects, Viaducto del Gran Manglar, Colombia

1Q18

Cementos Argos

Results

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DISCLAIMER DISCLAIMER

This document contains forward-looking statements and information related to Cementos Argos S.A. and its subsidiaries (together referred to as “Argos”) that are based

  • n the knowledge of current facts, expectations and

projections, circumstances and assumptions of future events. Various factors may cause Argos’ actual future results, performance or accomplishments to differ from those expressed or assumed herein. If an unexpected situation presents itself or if any of the premises or of the company’s estimations turn out to be incorrect, future results may differ significantly from the ones that are mentioned herein. The forward-looking statements are made to date and Argos does not assume any obligation to update said statements in the future as a result of new information, future events or any

  • ther factors.
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3

Argos One program, successfully launched % of transactions of cement and ready-mix done through digital platforms in Colombia

Delivering outstanding client experiences

23.1% 50.6% 10.4% 32.5%

jan-17 feb-17 mar-17 apr-17 may-17 jun-17 jul-17 aug-17 sep-17

  • ct-17

nov-17 dec-17 jan-18 feb-17 mar-17 apr-18

January 2017 April 2018

Cement RMC

To be fully deployed in 2018

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Consolidated Results

1

Argos present in 4G projects

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5

1Q18: BEST program efforts reflected on results

Sale of 3 inside the fence power plants in Colombia: USD 57M

  • COP 70 Bn non recurrent EBITDA

Focus on efficiency through BEST:

  • Margin improvement across all regions
  • SG&A reduction: 5.5% consolidated, 19.2% in Colombia

COP 55Bn net income benefited by the divestment in Colombia

Notes: *EBITDA 2017 has been restated excluding withholding tax **Adjusted Ebitda excludes the sale of power generation plants in Colombia

Integrated network of assets in the US

2017 2018 Revenues COP Bn 2,077 1,907

  • 8.2%

EBITDA* COP Bn 283 371 31.2% Adjusted EBITDA** COP Bn 294 300 2.0%

EBITDA margin* % 13.6% 19.5% 583.8 bps Adjusted EBITDA margin** % 14.2% 15.7% 157.1 bps

Net Income COP Bn

  • 45.5

54.8 NA

Net Margin %

  • 2.2%

2.9%

NA Var Key Figures 1Q

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Consolidated volume

*Definitions:

  • RMC: Ready-Mix Concrete
  • CCA: Caribbean and Central America Region
  • SE: South East Zone in USA
  • SC: South Central Zone in USA

1Q18

Colombia 35% USA 35% CCA 30% Colombia 32% USA 34% CCA 34% USA - SE 42% USA - SC 24% CCA, 4% Colombia 30% USA - SE, 43% USA - SC, 25% CCA, 5% Colombia 27%

1Q17 1Q18 1Q17 2017 2018 Total 3,842 3,686

  • 4.1%

Colombia 1,357 1,166

  • 14.1%

USA 1,341 1,250

  • 6.8%

CCA 1,143 1,270 11.0%

Cement (000 MT) 1Q Var 2017 2018 Total 2,638 2,440

  • 7.5%

Colombia 782 660

  • 15.6%

USA 1,737 1,665

  • 4.1%

USA - SE 1,115 1,057

  • 5.2%

USA - SC 622 608

  • 2.2%

CCA 119 115

  • 3.0%

RMC (000m3) 1Q Var

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USA Region

2

Falcons Stadium built with Argos, Atlanta, US.

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USA: Ebitda growth despite harsh winter

2017 2018 Volumes Cement 000 MT 1,341 1,250

  • 6.8%

RMC 000 m3 1,737 1,665

  • 4.1%

1Q Var

  • Cement and ready mix volumes affected by a harsh

winter in the east coast and heavy rainfalls in Texas

  • Normalization signs for 2018:
  • +10% RMC volumes in South Central Area

during April

  • Double-digit growth in Houston during April
  • Margin EBITDA improvement despite erratic

weather

  • EBITDA margins per segment: 19.9% cement:

3.4% RMC

Martinsburg Plant, US Region

Best Program goal FY18

USD 10M

Savings

2017 2018 Revenues USD M 361 337

  • 6.6%

EBITDA USD M 32.4 32.9 1.6%

EBITDA margin % 9.0% 9.8% 79.2 bps

1Q Var Key Figures

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USA: residential market driving volume growth, tailwinds for infrastructure

+11%

Housing starts

+4.0%

New home sales

+1.1%

Existing home sales

Total construction spending vs. Residential construction spending (% variation YoY)

Reduction of the environmental permitting process for infrastructure projects

Improvement in environmental permitting processes

MoM as of March MoM as of March YoY as of March

10

2

Process simplification: one lead federal agency will be responsible for reviewing major infrastructure projects

years

USD 10.8Bn

Securing Florida’s Future infrastructure plan materialized in 2018 - 2019 budget allocation

Source: Bloomberg, US Department of Transportation (www.fhwa.dot.gov), Securing Florida´s Future (http://fightingforfloridasfuturebudget.com/content/Current/rptMain.htm)

5% 7%

  • 50%
  • 40%
  • 30%
  • 20%
  • 10%

0% 10% 20% 30% Total Construction Spending Private Residential construction spending

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Colombia Region

3 3

Argos present in 4G projects: Pacífico II

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Colombia: BEST, a reality in the results

Notes: *Adjusted Ebitda excludes the sale of sale of power generation plants in Colombia

  • Argos’ cement volumes -14.1% compared to -5.4% of the industry. Effect of

Easter holiday affects 1Q and benefits 2Q.

  • -15.6% Ready-mix volumes explained by the performance of regular housing

segment, although was partially offset by civil works

  • +22% Dispatches for 4G projects vs. 1Q17
  • +8.9% Adjusted Ebitda, excluding the sale of inside the fence power plants
  • -20% in SG&A excluding depreciations, results from materialization of BEST
  • Margins per segment: Cement 19.9%; RMC 5.9%
  • Alternative fuels:
  • In February we started using tires as alternative fuel in the Cartagena Plant
  • Received the environmental permit to dispose impregnated waste in the

Cartagena Plant

Rioclaro Plant, Colombia Region

2017 2018 Volumes Cement 000 MT 1,357 1,166

  • 14.1%

RMC 000 m3 782 660

  • 15.6%

Var 1Q

2017 2018 Revenues COP Bn 599 520

  • 13.1%

EBITDA COP Bn 82 173 110.6% Adjusted EBITDA* COP Bn 94 102 8.9%

EBITDA margin % 13.7% 33.3% 1,957.8 Adjusted EBITDA margin* % 15.7% 19.6% 397.3 bps

1Q Var Key Figures

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Colombia: positive outlook of the residential market and a strong backlog in 4G projects

Source: Galería inmobiliaria

+22%

+20%

Social housing in Bogotá suggests a change on trend

+6.4%

Mid-income housing segment driven by governmental subsidies (from COP 105M – 262M) Change of trend in residential segment forecast a better second half for 2018 Pacífico II: 40% completion Viaducto el Gran Manglar, completely connected

Cement dispatches vs 1Q17

4G

  • 11.64%
  • 8.44%
  • 6.48%
  • 30%
  • 20%
  • 10%

0% 10% 20% 30% ene-15 feb-15 mar-15 abr-15 may-15 jun-15 jul-15 ago-15 sep-15

  • ct-15

nov-15 dic-15 ene-16 feb-16 mar-16 abr-16 may-16 jun-16 jul-16 ago-16 sep-16

  • ct-16

nov-16 dic-16 ene-17 feb-17 mar-17 abr-17 may-17 jun-17 jul-17 ago-17 sep-17

  • ct-17

nov-17 dic-17 ene-18 feb-18

Building permits by destination (Var. 12M)

Var 12M Social Var 12M Regular Var 12 M Other Destinations

Recovery in units sold (YTD)

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Caribbean and Central America Region

4

Argos present in infrastructure projects in Panama: Centenario Bridge

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CCA: Stable conditions benefit BEST program potential

2017 2018 Var Volumes Total Cement 000 MT 1,143 1,270 11.0%

Local markets 000 MT 838 889 6.0% Trading and Exports 000 MT 305 381 24.8%

RMC 000 m3 119 115

  • 3.0%

1Q

  • +6% Cement volumes in local markets, driven by

stable volumes in Honduras, and a positive dynamic in Dominican Republic (+9%) and Haiti (+24%)

  • +24% clinker exports and trading
  • Decrease in RMC volumes affected by Easter week

in Panamá

  • Revenues and EBITDA , according to budget, in an

stable pricing environment

  • Margins per segment: 33.2% cement; 4.5% RMC

Comayagua Plant, Honduras

Best Program goal FY18

USD 7M

Savings

2017 2018 Revenues USD M 144 148 2.5% EBITDA USD M 48 50

3.6% EBITDA margin % 33.3% 33.6% 35.5 bps

Key Figures 1Q Var

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CCA: Infrastructure projects strengthen Argos position in a region with positive outlook

Source: International Monetary Fund, Ministerio de Vivienda y Ordenamiento Territorial de Panamá

Honduras: GDP growth (YoY)

Boosted by important infrastructure projects as Corredor Vial de Occidente.

Panamá: GDP growth (YoY)

Relevant infrastructure projects: 3rd bridge over the Canal, 3rd Metro Line, Corredor de las Playas

+3.2%

Construction GDP 2017 (YoY)

6.8% 5.3% 3.1% 4.8% 2014 2015 2016 2017 9.5% 8.8% 7.4% 5.6% 2014 2015 2016 2017

+8.3%

Construction GDP 2017 (YoY)

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Balance Sheet

5

Enhanced concrete applied, Universidad EAFIT, Colombia

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Improving debt profile as of March 31st 2018

* FX Rate as of March 31st, 2018: COP 2780.5 / USD Note: Since 2Q15, for Net debt to EBITDA + Dividends ratio, Net debt and EBITDA are calculated with the same FX closing rate

Currency mix

Total debt: USD 2,500M

Consolidated cost of debt

LT 66% ST 34% COP 48% USD 52%

Leverage reflects the acquisition of Martinsburg Ongoing divestment plan to reach a leverage ratio between

3.5x to 3.6x by YE18

3.9x 4.2x 3.5x 1.9x 3.8x 3.2x 3.8x 4.6x 4.37x 3.0x 3.7x 3.8x 6.0x 5.9x 5.0x 4.4x 3.3x 3.3x

0.5x 1.5x 2.5x 3.5x 4.5x 5.5x 6.5x

2010 2011 2012 2013 2014 2015 2016 2017 1Q18

Net Debt / (EBITDA + Dividends) EBITDA / Financial expenses

10.4% 10.2% 9.6% 9.1% 9.0% 8.7% 8.0% 8.0% 8.1% 8.4% 8.3% 8.2% 8.0% 2.7% 2.7% 2.8% 2.9% 3.0% 3.0% 2.9% 2.9% 3.0% 2.9% 3.0% 3.1% 3.3%

mar-17 mar-17 may-17 jun-17 jul-17 aug-17 sep-17

  • ct-17

nov-17 dec-17 jan-18 feb-18 mar-18

COP USD

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Improving debt profile as of March 31st 2018

122 513 7 6 25 34 108 76 151 44 109 112 140 66 144 100 200 300 400 500 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2042 Bank Loans Bonds 138 186 39 1 128 1 1 1 9 302 1 1 35 50 100 150 200 250 300 april-18 may-18 jun-18 jul-18 aug-18 sep-18

  • ct-18

nov-18 dec-18 dic-18 ene-19 dec-19 Bank Loans Bonds

Short term: USD 843M Long term: USD 1,658M

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Argos 2018 outlook

~COP 1.8 – 1.9 Tn

(including divestments)

Colombia

  • Flat to low-single digit growth for cement market FY18
  • We expect dispatches for the 4G projects of around 200 – 300 thousand tons,

and foresee 2019 - 2020 peak years in consumption

  • Infrastructure segment expected to offset the regular housing performance in

2018

USA

  • USD 270 – 280M EBITDA Guidance FY18
  • Continuous recovery of market driven by residential sector and infrastructure for

2018

  • PCA estimates low single-digit growth for our markets

Caribbean and Central America

  • Stable growth for cement market driving results
  • Honduras and Panama will continue levering on positive fiscal fundamentals

to promote infrastructure

Consolidated EBITDA guidance FY18 Expected CAPEX FY18

USD 150 -170 M Operating (includes maintenance) ~USD 90 M Sogamoso commitments*

Note: *Includes commitments of Sogamoso postponed expansion that where not disbursed in 2017 Martinsburg Plant, US Region

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Appendix

6

Argos present in infrastructure projects in Panama: Metro de Panamá

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Summary per regional division / other businesses

Notes: *Adjusted Ebitda excludes the sale of power generation plants in Colombia

1Q17 1Q18 1Q17 Mgn (%) 1Q18 Mgn (%) COP Bn 599 520

  • 13.1%

94 15.7% 102 19.6% 1,057 965

  • 8.7%

95 9.0% 94 9.8% 421 422 0.2% 140 33.3% 142 33.7% 2,077 1,907

  • 8.1%

329 15.8% 339 17.8% NA

  • 35
  • 37

NA

  • 2

2,077 1,907

  • 8.2%

294 14.2% 300 15.7% USD M 205 182

  • 11.2%

32 15.7% 36 19.6% 361 337

  • 6.6%

32 9.0% 33 9.8% 144 148 2.5% 48 33.3% 50 33.7% NA

  • 12
  • 13

NA

  • 1

710 667

  • 6.1%

101 14.2% 105 15.7% Revenues Adjusted EBITDA* Var Other Businesses Consolidated Results Colombia USA CCA Colombia USA CCA Subtotal Corporate Corporate Other Businesses Consolidated Results

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Consolidated cash flow (COP Bn)

EBITDA 371,119 (+) Net Op. Working Capital (33,250) (-) Maintenance CAPEX 115,735 (-) Profitability CAPEX 27,476 (-) Taxes 47,460 Total Free Cash Flow 75,667 Financial Cash Flow (+) Net Finacial Expenses (106,049) (-) Net Dividends (73,930) (+) Net Other Non-Operating (13,159) (+) Net Financial Operations (38,188) (+) Divestments 148,996 (+) Acquisitions

  • (+) Exchange rate effect
  • Total Financial Cash Flow

(82,330) Total Cash Flow for the Period (6,663) (+) Initial Cash Flow 557,386 (+) Exchange rate effect 20,338 Final Cash Flow 571,060 Cash flow (COP Mill) Total

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Investment portfolio improves Argos financial flexibility

Applied Concrete: Banca Viro. Picture: Koncretus

*Argos holds a stake of the common shares in Grupo Sura. Note: FX Rate as of March 31st, 2018: COP 2780.5 / USD

Company % Stake Price per Share (COP) Value (COP million) Value (USD million) Grupo Sura 6.01% 37,280 1,050,672 378 Cartón de Colombia 2.14% 5,690 13,138 5

Total 1,063,810 383

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CONTACT INFORMATION

MANUELA RAMIREZ

mramirezm@argos.com.co

www.argos.co/ir

IR TEAM

CATALINA RICAURTE

cricaurte@argos.com.co

This recognition, called Reconocimiento Emisores – IR is given by the Colombian Stock Exchange, Bolsa de Valores de Colombia S.A. It is not a recognition that certifies the quality of registered stock , nor does it guarantee the solvency of the issuer.