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Loma Negra Reports 3Q20 Results

·23 min read

Loma Negra, (NYSE: LOMA)(BYMA: LOMA), ("Loma Negra" or the "Company"), the leading cement producer in Argentina, today announced results for the three-month and nine-month period ended September 30, 2020 (our "3Q20").

3Q20 Key Highlights

  • Net revenue decreased by 4.5% YoY to Ps.10,756 million (US$143 million), with robust rebound in our core segment, but negatively impacted by other segments

  • Consolidated Adjusted EBITDA up 11.6% YoY to Ps.3,389 million (US$48 million)

  • Consolidated Adjusted EBITDA margin expanded by 454 basis points YoY from 27.0% to 31.5%, driven by higher cement, masonry and lime sales and strong focus on cost control

  • Net profit was Ps.6,449 million including the divestment in Paraguay

  • Income from discontinued operations in Paraguay was Ps.4,204 million for the three-months period

  • Railway segment impacted by of Ps.1,068 million, due to non-cash losses an impairment of property, plant and equipment and other non-recurrent losses

  • Net Debt /LTM Adjusted EBITDA ratio of 0.12x from 1.17x in 2Q20 and 0.86x in FY19

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 third quarter of 2020, Sergio Faifman, Loma Negra’s Chief Executive Officer, noted: "We feel very satisfied with the robust position with which we concluded this third quarter. We have improved our operational results with margins expansion, in the back of a continuing sales volume improvement coupled with effective cost and price management.

Additionally, we executed seamlessly the sale of our Paraguayan operation, an excellent deal in terms of value generation and timing. We optimized the proceeds from the transaction, creating value for our shareholders at the time we strengthen our already robust financial situation.

In the quarter, cement demand in Argentina continues to operate at two-speeds. On one side, Bag segment has confirmed the strong recovery path, 18% year-over-year, mostly explained by household and retail demand. By contrast, Bulk segment, as well as Concrete and Aggregates, are still affected by the very low levels of larger private and public works which execution is still hampered by lockdowns and its effects.

L’Amalí expansion project, a key element of our long-term strategy, is on track. Certainly, the COVID-19 pandemic is still a source of uncertainty, and may provoke additional delays to the startup of the new production line, which is expected to be at the beginning of 2021.

Once again, I would like to thank all our people, and stakeholders, without whom these above mentioned results would have been very difficult, particularly during this unprecedented times. Let´s keep moving forward, with the same responsibility and resourcefulness we have shown to overcome any challenge and to grasp every opportunity on our way."

Table 1: Financial Highlights

(amounts expressed in millions of pesos, unless otherwise noted)

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Chg.

2020

2019

% Chg.

Net revenue

10,756

11,260

-4.5%

25,475

33,012

-22.8%

Gross Profit

3,010

2,898

3.9%

7,008

8,771

-20.1%

Gross Profit margin

28.0%

25.7%

+225bps

27.5%

26.6%

+94bps

Adjusted EBITDA

3,389

3,037

11.6%

7,682

8,626

-10.9%

Adjusted EBITDA Mg.

31.5%

27.0%

+454bps

30.2%

26.1%

+403bps

Net Profit

6,449

83

7715.7%

7,567

3,569

112.0%

Net Profit attributable to owners of the Company

6,436

68

9356.1%

7,496

3,411

119.7%

EPS

10.7977

0.1142

9356.1%

12.5770

5.7234

119.7%

Shares outstanding at eop

596

596

0.0%

596

596

0.0%

Net Debt

1,454

12,380

-88.3%

1,454

12,380

-88.3%

Net Debt /LTM Adjusted EBITDA

0.12x

1.05x

-0.93x

0.12x

1.05x

-0.93x

Table 1b: Financial Highlights in Ps and in U.S. dollars (figures exclude the impact of IAS 29)

In million Ps.

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Chg.

2020

2019

% Chg.

Net revenue

10,487

7,830

33.9%

23,477

20,881

12.4%

Adjusted EBITDA

3,511

2,213

58.6%

7,445

5,710

30.4%

Adjusted EBITDA Mg.

33.5%

28.3%

+521bps

31.7%

27.3%

+436bps

Net Profit

8,258

(448)

n/a

9,039

1,405

543.2%

Net Debt

1,454

12,380

-88.3%

1,454

12,380

-88.3%

Net Debt /LTM Adjusted EBITDA

0.12x

1.05x

-0.93x

0.12x

1.05x

-0.93x

In million US$

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Chg.

2020

2019

% Chg.

Ps./US$, av

73.35

50.59

45.0%

67.62

44.60

51.6%

Ps./US$, eop

76.18

57.56

32.3%

76.18

57.56

32.3%

Net revenue

143

155

-7.6%

347

468

-25.8%

Adjusted EBITDA

48

44

9.4%

110

128

-14.0%

Adjusted EBITDA Mg.

33.5%

28.3%

+521bps

31.7%

27.3%

+436bps

Net Profit

113

(9)

n/a

134

32

324.2%

Net Debt

19

215

-91.1%

19

215

-91.1%

Net Debt /LTM Adjusted EBITDA

0.12x

1.05x

-0.93x

0.12x

1.05x

-0.93x

Overview of Operations

Sales Volumes

Table 2: Sales Volumes2

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Chg.

2020

2019

% Chg.

Cement, masonry & lime

MM Tn

1.53

1.49

2.9%

3.54

4.19

-15.5%

Concrete

MM m3

0.06

0.19

-70.2%

0.15

0.67

-77.4%

Railroad

MM Tn

1.06

1.13

-5.8%

2.63

3.36

-21.7%

Aggregates

MM Tn

0.19

0.26

-25.2%

0.35

0.85

-59.0%

2 Sales volumes include inter-segment sales

Sales volumes of cement, masonry and lime in Argentina during 3Q20 increased 2.9% to 1.53 million tons reflecting a sustained recovery for bagged cement, mostly explained by a stronger household and retail demand. Conversely, bulk segment is still heavily impacted by the slow execution of larger private and public construction works, in part hampered by COVID-19 lockdowns and also due to economic restrictions.

In this line, sales volumes in the Concrete and Aggregates segments plummeted 70.2% and 25.2% YoY, to 0.06 million m3 and 0.19 million tons, respectively, as they were also heavily affected by the lock-down and economic uncertainty impacting major private and public projects.

Railroad segment volumes experienced a 5.8% decline versus the comparable quarter in 2019, mainly explained by the volume drop of frac-sand and building materials.

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)

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Chg.

2020

2019

% Chg.

Net revenue

10,756

11,260

-4.5%

25,475

33,012

-22.8%

Cost of sales

(7,746)

(8,362)

-7.4%

(18,467)

(24,241)

-23.8%

Gross Profit

3,010

2,898

3.9%

7,008

8,771

-20.1%

Share of loss of associates

(363)

-

n/a

(363)

-

n/a

Selling and administrative expenses

(828)

(791)

4.6%

(2,165)

(2,527)

-14.3%

Other gains and losses

6

40

-86.1%

58

17

238.8%

Impairment of property, plant and equipment

(851)

-

n/a

(851)

-

n/a

Tax on debits and credits to bank accounts

(133)

(123)

8.1%

(323)

(372)

-13.1%

Finance costs, net

Gain on net monetary position

107

376

-71.6%

320

1,255

-74.5%

Exchange rate differences

2,054

(2,064)

n/a

1,245

(1,891)

n/a

Financial income

218

104

108.9%

67

119

-43.7%

Financial expenses

(377)

(463)

-18.4%

(1,229)

(1,171)

4.9%

(Loss) Profit before taxes

2,843

(22)

n/a

3,767

4,202

-10.4%

Income tax expense

Current

(965)

205

n/a

(1,175)

(855)

37.4%

Deferred

367

(363)

n/a

369

(443)

n/a

Net profit (loss) from continuing operations

2,245

(180)

n/a

2,960

2,903

2.0%

Income from discontinued operations

4,204

262

1502.5%

4,607

665

592.5%

Net profit (loss)

6,449

83

7715.7%

7,567

3,569

112.0%

Net Revenues

Net revenue decreased 4.5% to Ps. 10,756 million in 3Q20, from Ps. 11,260 million in the comparable quarter last year, reflecting the impact of the COVID-19 lockdown and the negative economic momentum in segments other than our core cement business which was up 5.3%.

Our cement revenues experienced an increase of 5.3%, on the back of volumes expansion of 2.9%, with robust rebound in Bag and favorable pricing.

Railroad revenues decreased 29.8% YoY versus the comparable quarter in 2019, as the lower frac-sand and building materials demand affected both volumes and pricing mix.

Concrete plummeted 75.5%, with both sales volumes and prices declining when compared to the 2Q in the year ago period. Aggregates declined by 24.4%, as pricing performance partially compensated the 25.2% volume decline.

Cost of sales, and Gross profit

Cost of sales decreased 7.4% YoY reaching Ps.7,746 million in 3Q20 mainly as a result of the lower volume sold coupled with higher efficiencies and lower unitary energy costs measured in US dollars. Additionally, structure costs benefitted by previous footprint adequacy efforts.

Gross profit increased 3.9% YoY to Ps.3,010 million in 3Q20 from Ps.2,898 million in 3Q19, with gross profit margin expanding 225 basis points YoY to 28.0%, reflecting the recovery in cement sales volumes coupled with good cost and pricing performance.

Selling and Administrative Expenses

Selling and administrative expenses (SG&A) in 3Q20 increased 4.6% YoY to Ps.828 million, from Ps.791 million in 3Q19. As a percentage of revenues, SG&A increased 67 basis points to 7.7% in 3Q20, from 7.0% in 3Q19 mainly as a consequence of higher percentage of bagged cement sales on total sales.

Adjusted EBITDA & Margin

Table 4: Adjusted EBITDA Reconciliation & Margin

(amounts expressed in millions of pesos, unless otherwise noted)

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Chg.

2020

2019

% Chg.

Adjusted EBITDA reconciliation:

Net profit

6,449

83

7715.7%

7,567

3,569

112.0%

(+) Depreciation and amortization

1,201

890

34.9%

2,782

2,365

17.7%

(+) Tax on debits and credits to bank accounts

133

123

8.1%

323

372

-13.1%

(+) Income tax expense

598

158

278.6%

806

1,298

-37.9%

(+) Financial interest, net

(9)

289

n/a

804

881

-8.7%

(+) Exchange rate differences, net

(2,054)

2,064

n/a

(1,245)

1,891

n/a

(+) Other financial expenses, net

168

70

141.8%

358

171

109.5%

(+) Gain on net monetary position

(107)

(376)

-71.6%

(320)

(1,255)

-74.5%

(+) Share of loss of associates

363

-

n/a

363

-

n/a

(+) Impairment of property, plant and equipment

851

-

n/a

851

-

n/a

(-) Income from discontinued operations

4,204

262

1502.5%

4,607

665

592.5%

Adjusted EBITDA

3,389

3,037

11.6%

7,682

8,626

-10.9%

Adjusted EBITDA Margin

31.5%

27.0%

+454bps

30.2%

26.1%

+403bps

Adjusted EBITDA increased 11.6% YoY in the second quarter of 2020 to Ps. 3,389 million, mostly explained by bagged cement. Adjusted EBITDA margin expanded by 454 basis points to 31.5% compared to 27.0% in 3Q19, also on the back of cement margins expansion.

In particular, Cement, masonry cement and lime segment Adjusted EBITDA margin expanded by 472 bps to 34.3%, mainly due to improved energy inputs and lighter fixed cost structure, and further supported by the increase in revenues.

Railroad Adjusted EBITDA margin deteriorated to 6.3%, impacted by lower volumes and pricing mix, and costs declining less than proportional.

Finally, Concrete and Aggregates were heavily impacted by low level of construction works execution, therefore Adjusted EBITDA margin at -16.6% and -31.9%, respectively.

Finance Costs-Net

Table 5: Finance Costs, net

(amounts expressed in millions of pesos, unless otherwise noted)

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Chg.

2020

2019

% Chg.

Exchange rate differences

2,054

(2,064)

n/a

1,245

(1,891)

n/a

Financial income

218

104

108.9%

67

119

-43.7%

Financial expenses

(377)

(463)

-18.4%

(1,229)

(1,171)

4.9%

Gain on net monetary position

107

376

-71.6%

320

1,255

-74.5%

Total Finance Costs, Net

2,001

(2,046)

n/a

403

(1,688)

n/a

During 3Q20, the Company reported a gain of Ps.2,001 million in total finance costs-net compared to a loss of Ps. 2,046 million in the previous year third quarter, mainly due to a gain in foreign exchange differences. Net Financial expense decreased by Ps.199 million to Ps.160 million resulting from a lower financial debt position.

Net Profit and Net Profit Attributable to Owners of the Company

Net Profit for 3Q20 stood at Ps.6,449 million, which includes Ps.4,204 million of income from discontinued operations in Paraguay, reflecting the sale of our 51% stake in Yguazú Cementos S.A.

Net profit from continuing operations, increased by Ps.2,425 million, mostly explained by a gain in foreign exchange differences and Adjusted EBITDA growth. Additionally, due to a change in business perspectives for our Railway and Aggregate segments, a non-cash impairment loss of Ps.851 million was recorded. Moreover, net profit was also affected by a Ps. 363 million share loss in associates related to a cash contribution done in Ferrosur Roca, in order to preserve the stake of minority interest.

Net Profit Attributable to Owners of the Company increased by Ps. 6,368 million YoY, to Ps.6,436 million in 3Q20. During the quarter, the Company reported earnings per common share of Ps.10.7977 and earnings per ADR of Ps.53.9886, compared with earnings per common share of Ps.0.1142 and earnings per ADR of Ps.0.5709 in 3Q19.

Capitalization

Table 6: Capitalization and Debt Ratio

(amounts expressed in millions of pesos, unless otherwise noted)

As of September 30,

As of

December, 31

2020

2019

2019

Total Debt

6,105

14,229

11,262

- Short-Term Debt

3,932

6,819

6,262

- Long-Term Debt

2,173

7,411

5,001

Cash and Cash Equivalents

4,652

1,849

1,595

Total Net Debt

1,454

12,380

9,667

Shareholders' Equity

38,115

34,948

35,864

Capitalization

44,221

49,177

47,127

LTM Adjusted EBITDA

11,992

11,785

11,640

Net Debt /LTM Adjusted EBITDA

0.12x

1.05x

0.83x

As of September 30, 2020, total cash and cash equivalents were Ps.4,652 million compared with Ps.1,595 million as of the December 31, 2019. Total debt at the close of the quarter stood at Ps.6,105 million, composed by Ps.3,932 million in short-term borrowings, including the current portion of long-term borrowings (or 64% of total borrowings), and Ps.2,173 million in long-term borrowings (or 36% of total borrowings).

As of September 30, 2020, 84% (or Ps.5,119 million) Loma Negra’s total debt was denominated in U.S. dollars, and 16% (or Ps.987 million) in Euros. The average duration of Loma Negra’s total debt was 0.8 years.

As of September 30, 2020, Ps.5,119 million, or 84%, of the Company’s total consolidated borrowings bore interest at rates based on Libor, and Ps.987 million of borrowings bore interest at a fixed rate.

The Net Debt to Adjusted EBITDA (LTM) ratio decreased to 0.12x as of September 30, 2020 from 1.17x as of June 30,2020 as a result of the proceeds from the sale our 51% stake in Yguazú Cementos S.A. and the additional cash generated from our continuing operations together with the use of funds in investing activities.

Cash Flows

Table 7: Condensed Interim Consolidated Statement of Cash Flows for the Three-months and Nine-months ended September 30, 2020 and 2019

(amounts expressed in millions of pesos, unless otherwise noted)

Three-months ended

September 30,

Nine-months

ended

September 30,

2020

2019

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit (loss) from continuing operations

2,245

(180)

2,960

2,903

Income from discontinued operations

4,204

262

4,607

665

Net profit

6,449

83

7,567

3,569

Adjustments to reconcile net profit to net cash provided by operating activities

(3,964)

2,350

(1,139)

5,058

Changes in operating assets and liabilities

852

1,501

204

(2,595)

Net cash generated by / used in by operating activities

3,337

3,933

6,632

6,032

CASH FLOWS FROM INVESTING ACTIVITIES

Property, plant and equipment, Intangible Assets, net

(1,563)

(4,232)

(7,167)

(11,472)

Contributions to Trust

(26)

(26)

(50)

(62)

Proceeds from disposal of Yguazú Cementos S.A.

7,495

-

7,495

-

Net cash generated by / used in investing activities

5,906

(4,258)

278

(11,534)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds / Repayments from borrowings, Interest paid

(9,994)

101

(6,578)

2,185

Net cash generated by / used in by financing activities

(9,994)

101

(6,578)

2,185

Net increase (decrease) in cash and cash equivalents

(750)

(223)

332

(3,317)

Cash and cash equivalents at the beginning of the year

2,628

1,087

1,595

4,385

Effect of the re-expression in homogeneous cash currency ("Inflation-Adjusted")

(33)

(51)

(100)

(149)

Effects of the exchange rate differences on cash and cash equivalents in foreign currency

2,806

18

2,825

(88)

Cash and cash equivalents at the end of the period

4,652

831

4,652

831

In the 3Q20, our cash flow generated by operating activities was Ps.3,337 million compared to Ps.3,933 million in 3Q19 as higher working capital needs more than offset the Adjusted EBITDA growth. During 3Q20, the Company made capital expenditures for a total of Ps.1,563 million, mostly allocated to the expansion of production capacity of L’Amalí plant. Additionally, a total of Ps.7,495 million funds were received related to the disposal of Yguazú Cementos S.A.

Expansion of L’Amalí Plant.

Loma Negra is moving ahead with the capital expenditure at its L’Amalí plant, which will add 2.7 million tons annually and drive higher profitability. This expansion involves a total capital expenditure, originally estimated at approximately US$350 million.

As of the end of the quarter, all detailed engineering is completed, all equipment and materials supplies has been delivered to site, and commissioning and start-up has been completed at crushing department and new primary crusher is fully operational.

Civil and electromechanical works present a progress of approximately 90%. The works to be completed are electromechanical erection works at kiln, cement mill and dispatch areas.

Certainly, the impact of the delay, the adoption of new construction protocol, or any other potential measures related to COVID-19 pandemic may provoke additional delays to the startup of the new production line, which is expected to be at the beginning of 2021.

Sale of Paraguayan company Yguazú Cementos S.A.

On August 21, 2020, Loma Negra C.I.A.S.A. (the "Company") sold its total stake in the Paraguayan company Yguazú Cementos S.A. ("Yguazú"), which represented 51.0017% of the capital stock of Yguazú. The sale was made to the local shareholder of Yguazú.

The goal of the Company is to seek and execute high potential projects, for this reason, after having started marketing operations in Paraguay in 2000, built and operated the factory since 2013, and currently reaching high standards of production and profitability, it was decided to sell it.

The Company considers that the economic result of Ps.4,204 million obtained by this operation was very beneficial for Loma Negra and is in line with maximizing value for its shareholders. The sale price was US$107 million, the use of proceeds was mainly applied to repay existing debt and for the distribution of an extraordinary dividend.


Recent Events

Dividend distribution

Taking into account the extraordinary income as a result of the sale of the Company's stake in the Paraguayan company Yguazú Cementos SA, and other factors, including the current flow of funds, the current financial situation of the Company, the high degree of progress of the current project to expand the L'Amalí cement plant, and the investment plans projected by the Company in the short and medium term, the board of directors decided about the convenience of a cash dividend distribution.

With this considerations, on August 28, 2020, the board of directors called for an Ordinary General Shareholders´ Meeting. In this regard, during the ordinary shareholders‘ meeting held on September 30, 2020 it was approved the payment of dividends for a total amount of Ps. 2,400 million equivalent to Ps. 4.027 per outstanding share (Ps.20.133 per ADS) and the allocation of all the funds in the Reserve for Future Dividends and part of the funds in the Optional Reserve to the payment of the dividends. As of the date of this Earnings release presentation, the full amount of dividends was distributed.

3Q20 Earnings Conference Call

When:

10:00 a.m. U.S. ET (12:00 a.m. BAT), November 11, 2020

Dial-in:

0800-444-2930 (Argentina), 1-833-255-2824 (U.S.), 1-866-605-3852 (Canada), 1-412-902-6701 (International)

Password:

Loma Negra Earnings Call

Webcast:

https://services.choruscall.com/links/loma201111X8vSYMy7.html

Replay:

A telephone replay of the conference call will be available between November 11, 2020 at 1:00 pm U.S. E.T. and ending on November 17, 2020. The replay can be accessed by dialing 1-877-344-7529 (U.S. toll free), or 1-412-317-0088 (International). The passcode for the replay is 10149478. The audio of the conference call will also be archived on the Company’s website at www.lomanegra.com

Definitions

Adjusted EBITDA is calculated as net profit plus financial interest, net plus income tax expense plus depreciation and amortization plus exchange rate differences plus other financial expenses, net plus tax on debits and credits to bank accounts, plus share of loss of associates, plus net Impairment of Property, plant and equipment, and less income from discontinued operation. Loma Negra believes that excluding tax on debits and credits to bank accounts from its calculation of Adjusted EBITDA is a better measure of operating performance when compared to other international players.

Net Debt is calculated as borrowings less cash and cash equivalents.

About Loma Negra

Founded in 1926, Loma Negra is the leading cement company in Argentina, producing and distributing cement, masonry cement, aggregates, concrete and lime, products primarily used in private and public construction. Loma Negra is a vertically-integrated cement and concrete company, with nationwide operations, supported by vast limestone reserves, strategically located plants, top-of-mind brands and established distribution channels. Loma Negra is listed both on BYMA and on NYSE in the U.S., where it trades under the symbol "LOMA". One ADS represents five (5) common shares. For more information, visit www.lomanegra.com.

Note

The Company presented some figures converted from Pesos to U.S. dollars for comparison purposes. The exchange rate used to convert Pesos to U.S. dollars was the reference exchange rate (Communication "A" 3500) reported by the Central Bank for U.S. dollars. The information presented in U.S. dollars is for the convenience of the reader only. Certain figures included in this report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures presented in previous quarters.

Rounding: We have made rounding adjustments to reach some of the figures included in this annual report. As a result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Disclaimer

This release contains forward-looking statements within the meaning of federal securities law that are subject to risks and uncertainties. These statements are only predictions based upon our current expectations and projections about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," "seek," "forecast," or the negative of these terms or other similar expressions. The forward-looking statements are based on the information currently available to us. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including, among others things: changes in general economic, political, governmental and business conditions globally and in Argentina, changes in inflation rates, fluctuations in the exchange rate of the peso, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy and various other factors. You should not rely upon forward-looking statements as predictions of future events. Although we believe in good faith that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Any or all of Loma Negra’s forward-looking statements in this release may turn out to be wrong. You should consider these forward-looking statements in light of other factors discussed under the heading "Risk Factors" in the prospectus filed with the Securities and Exchange Commission on October 31, 2017 in connection with Loma Negra’s initial public offering. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations.

Table 8: Condensed Interim Consolidated Statements of Financial Position as of September 30, 2020 and December 31, 2019

(amounts expressed in millions of pesos, unless otherwise noted)

As of

September 30,

As of

December 31,

2020

2019

ASSETS

Non-current assets

Property, plant and equipment

47,524

48,303

Right to use assets

424

499

Intangible assets

114

154

Investments

3

5,409

Goodwill

31

31

Inventories

1,962

1,831

Other receivables

426

687

Total non-current assets

50,483

56,914

Current assets

Inventories

4,980

5,922

Other receivables

1,130

687

Trade accounts receivable

2,665

2,903

Investments

4,383

1,247

Cash and banks

...

269

348

Total current assets

13,427

11,107

TOTAL ASSETS

63,910

68,021

SHAREHOLDERS' EQUITY

Capital stock and other capital related accounts

13,518

13,518

Reserves

16,815

14,520

Retained earnings

7,496

4,695

Accumulated other comprehensive income

-

404

Equity attributable to the owners of the Company

37,829

33,136

Non-controlling interests

287

2,728

TOTAL SHAREHOLDERS' EQUITY

38,115

35,864

LIABILITIES

Non-current liabilities

Borrowings

2,173

5,001

Accounts payables

90

170

Provisions

718

682

Debts for leases

375

416

Other liabilities

50

63

Deferred tax liabilities

6,278

6,647

Total non-current liabilities

9,684

12,978

Current liabilities

Borrowings

3,932

6,262

Accounts payable

5,848

10,681

Advances from customers

558

233

Salaries and social security payables

979

1,148

Tax liabilities

2,178

628

Debts for leases

126

125

Other liabilities

2,491

102

Total current liabilities

16,111

19,178

TOTAL LIABILITIES

25,795

32,156

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

63,910

68,021

Table 9: Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Income (unaudited)

(amounts expressed in millions of pesos, unless otherwise noted)

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

% Change

2020

2019

% Change

Net revenue

10,756

11,260

-4.5%

25,475

33,012

-22.8%

Cost of sales

(7,746)

(8,362)

-7.4%

(18,467)

(24,241)

-23.8%

Gross profit

3,010

2,898

3.9%

7,008

8,771

-20.1%

Share of loss of associates

(363)

-

n/a

(363)

-

n/a

Selling and administrative expenses

(828)

(791)

4.6%

(2,165)

(2,527)

-14.3%

Other gains and losses

6

40

-86.1%

58

17

238.8%

Impairment of property, plant and equipment

(851)

-

n/a

(851)

-

n/a

Tax on debits and credits to bank accounts

(133)

(123)

8.1%

(323)

(372)

-13.1%

Finance costs, net

Gain on net monetary position

107

376

-71.6%

320

1,255

-74.5%

Exchange rate differences

2,054

(2,064)

n/a

1,245

(1,891)

n/a

Financial income

218

104

108.9%

67

119

-43.7%

Financial expenses

(377)

(463)

-18.4%

(1,229)

(1,171)

4.9%

Profit (Loss) before taxes

2,843

(22)

n/a

3,767

4,202

-10.4%

Income tax expense

Current

(965)

205

n/a

(1,175)

(855)

37.4%

Deferred

367

(363)

n/a

369

(443)

n/a

Net profit (loss) from continuing operations

2,245

(180)

n/a

2,960

2,903

2.0%

Income from discontinued operations

4,204

262

1502.5%

4,607

665

592.5%

Net profit

6,449

83

7715.7%

7,567

3,569

112.0%

Other Comprehensive Income

Items to be reclassified through profit and loss:

Exchange differences on translating foreign operations

(159)

669

n/a

(257)

239

n/a

Total other comprehensive (loss) income

(159)

669

n/a

(257)

239

n/a

TOTAL COMPREHENSIVE INCOME

6,290

752

736.6%

7,310

3,808

92.0%

Net Profit (loss) for the period attributable to:

Owners of the Company

6,436

68

9356.1%

7,496

3,411

119.7%

Non-controlling interests

14

14

-6.3%

71

157

-54.9%

NET PROFIT FOR THE PERIOD

6,449

83

7715.7%

7,567

3,569

112.0%

Total comprehensive (loss) income attributable to:

Owners of the Company

6,354

409

1452.0%

7,365

3,533

108.4%

Non-controlling interests

(64)

342

n/a

(55)

275

n/a

TOTAL COMPREHENSIVE INCOME

6,290

752

736.6%

7,310

3,808

92.0%

Earnings per share (basic and diluted):

10.7977

0.1142

9356.0%

12.5770

5.7234

119.7%

Table 10: Condensed Interim Consolidated Statement of Cash Flows for the Three-months and Nine-months ended September 30, 2020 and 2019

(amounts expressed in millions of pesos, unless otherwise noted)

Three-months ended

September 30,

Nine-months ended

September 30,

2020

2019

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit (loss) from continuing operations

2,245

(180)

2,960

2,903

Income from discontinued operations

4,204

262

4,607

665

Net profit

6,449

83

7,567

3,569

Adjustments to reconcile net profit to net cash provided by operating activities

Income tax expense

1,960

225

2,169

1,365

Depreciation and amortization

1,201

890

2,782

2,365

Provisions

(28)

(1)

(38)

112

Interest expense

16

347

935

827

Exchange rate differences

(2,694)

1,427

(2,378)

1,134

Share of loss of associates

568

(527)

363

(732)

Gain on disposal of property, plant and equipment

22

(12)

39

(12)

Gain on disposal of shareholding of Yguazú Cementos S.A.

(5,970)

-

(5,970)

-

Impairment of property, plant and equipment

851

-

851

-

Depreciation value of trust

108

-

108

-

Changes in operating assets and liabilities

Inventories

984

823

677

(205)

Other receivables

155

(177)

76

(163)

Trade accounts receivable

(549)

(91)

(227)

(782)

Advances from customers

241

7

342

(42)

Accounts payable

585

1,189

607

935

Salaries and social security payables

292

120

6

212

Provisions

(11)

52

(37)

(76)

Tax liabilities

(276)

793

(104)

330

Other liabilities

7

11

(23)

82

Gain on net monetary position

(107)

(376)

(320)

(1,255)

Income tax paid

(469)

(848)

(794)

(1,631)

Net cash generated by / used in by operating activities

3,337

3,933

6,632

6,032

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of Yguazú Cementos S.A.

7,495

-

7,495

-

Proceeds from disposal of Property, plant and equipment

14

30

36

43

Payments to acquire Property, plant and equipment

(1,576)

(4,255)

(7,199)

(11,480)

Payments to acquire Intangible Assets

(1)

(7)

(4)

(36)

Contributions to Trust

(26)

(26)

(50)

(62)

Net cash generated by / used in investing activities

5,906

(4,258)

278

(11,534)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

0

3,395

11,359

8,087

Interest paid

(1,069)

(855)

(2,541)

(1,691)

Debts for leases

(36)

(56)

(98)

(88)

Repayment of borrowings

(8,888)

(2,384)

(15,298)

(4,123)

Net cash generated by / used in by financing activities

(9,994)

101

(6,578)

2,185

Net increase (decrease) in cash and cash equivalents

(750)

(223)

332

(3,317)

Cash and cash equivalents at the beginning of the period

2,628

1,087

1,595

4,385

Effect of the re-expression in homogeneous cash currency ("Inflation-Adjusted")

(33)

(51)

(100)

(149)

Effects of the exchange rate differences on cash and cash equivalents in foreign currency

2,806

18

2,825

(88)

Cash and cash equivalents at the end of the period

4,652

831

4,652

831

Table 11: Financial Data by Segment (figures exclude the impact of IAS 29)

(amounts expressed in millions of pesos, unless otherwise noted)

Three-months ended

September 30,

Nine-months ended

September 30,

2020

%

2019

%

2020

%

2019

%

Net revenue

10,487

100.0%

7,830

100.0%

23,477

100.0%

20,881

100.0%

Cement, masonry cement and lime

9,801

93.5%

6,638

84.8%

21,433

91.3%

17,263

82.7%

Concrete

340

3.2%

987

12.6%

917

3.9%

3,187

15.3%

Railroad

770

7.3%

783

10.0%

2,167

9.2%

2,147

10.3%

Aggregates

128

1.2%

120

1.5%

202

0.9%

379

1.8%

Others

29

0.3%

44

0.6%

114

0.5%

110

0.5%

Eliminations

(581)

-5.5%

(742)

-9.5%

(1,356)

-5.8%

(2,205)

-10.6%

Cost of sales

6,688

100.0%

5,361

100.0%

15,192

100.0%

14,359

100.0%

Cement, masonry cement and lime

5,799

86.7%

4,340

81.0%

12,831

84.5%

11,249

78.3%

Concrete

531

7.9%

936

17.5%

1,260

8.3%

2,979

20.7%

Railroad

753

11.3%

676

12.6%

2,101

13.8%

1,869

13.0%

Aggregates

162

2.4%

120

2.2%

278

1.8%

396

2.8%

Others

24

0.4%

31

0.6%

78

0.5%

72

0.5%

Eliminations

(581)

-8.7%

(742)

-13.8%

(1,356)

-8.9%

(2,205)

-15.4%

Selling, admin. expenses and other gains & losses

728

100.0%

513

100.0%

1,774

100.0%

1,543

100.0%

Cement, masonry cement and lime

687

94.4%

435

84.9%

1,606

90.5%

1,269

82.3%

Concrete

(8)

-1.0%

21

4.2%

1

0.0%

91

5.9%

Railroad

30

4.1%

41

8.0%

120

6.8%

139

9.0%

Aggregates

1

0.2%

(0)

0.0%

(2)

-0.1%

3

0.2%

Others

17

2.3%

15

3.0%

50

2.8%

40

2.6%

Depreciation and amortization

440

100.0%

257

100.0%

935

100.0%

732

100.0%

Cement, masonry cement and lime

237

53.9%

185

72.0%

570

61.0%

538

73.6%

Concrete

134

30.4%

18

7.1%

168

17.9%

45

6.2%

Railroad

62

14.1%

48

18.6%

178

19.0%

132

18.0%

Aggregates

6

1.3%

5

1.9%

16

1.7%

14

1.9%

Others

1

0.2%

1

0.4%

3

0.4%

2

0.3%

Adjusted EBITDA

3,511

100.0%

2,213

100.0%

7,445

100.0%

5,710

100.0%

Cement, masonry cement and lime

3,552

101.2%

2,048

92.5%

7,566

101.6%

5,283

92.5%

Concrete

(50)

-1.4%

48

2.2%

(176)

-2.4%

162

2.8%

Railroad

49

1.4%

114

5.1%

123

1.7%

270

4.7%

Aggregates

(30)

-0.8%

5

0.2%

(57)

-0.8%

(6)

-0.1%

Others

(10)

-0.3%

(1)

-0.1%

(11)

-0.1%

1

0.0%

Reconciling items:

Effect by translation in homogeneous cash currency ("Inflation-Adjusted")

(122)

823

237

2,916

Depreciation and amortization

(1,201)

(890)

(2,782)

(2,365)

Tax on debits and credits banks accounts

(133)

(123)

(323)

(372)

Finance costs, net

2,001

(2,046)

403

(1,688)

Income tax

(598)

(158)

(806)

(1,298)

Share of profit of associates

(363)

-

(363)

-

Impairment of property, plant and equipment

(851)

-

(851)

-

Income from discontinued operations

4,204

262

4,607

665

NET (LOSS) PROFIT FOR THE PERIOD

6,449

83

7,567

3,569

View source version on businesswire.com: https://www.businesswire.com/news/home/20201110006189/en/

Contacts

IR Contacts

Marcos I. Gradin, Chief Financial Officer and Investor Relations

Gastón Pinnel, Investor Relations Manager

+54-11-4319-3050
investorrelations@lomanegra.com