Cementos Argos Sa · BVC:CEMARGOS
Cementos Argos Sa — Investor Presentation (2016)
42 slides from Cementos Argos Sa's investor presentation, 2016
Slide 1: Cementos Argos S.A Corporate presentation
Cementos Argos S.A Corporate presentation 2016
Slide 2: 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 on the knowledge of current facts, expectations and projections, circumstances and assumptions of future events. Various f
Slide 3: Cementos Argos at A Glance
Cementos Argos at A Glance Leading pure cement player in the United States, Colombia, Caribbean & Central America Installed capacity: Cement 21 M tons RMC 18 M m3 5-year CAGR of 21% in revenues and 23% in EBITDA Included in the Dow Jones Global and Emerging Markets Sustainability Index, fo
Slide 4: Leading Growing Multinational Cement Company Focused on Value Creation
Argos: Leading Growing Multinational Cement Company Focused on Value Creation #1 or #2 Positions in Key Emerging and Developed 1 Interconnected Markets in the Americas Flexible Operations with Vertical Integration and 2 Extensive Logistics Network 3 Operating in Countries with Significant Growth Pot
Slide 5: #1 or #2 Positions in Key Emerging and Developed Interconnected Markets
#1 or #2 Positions in Key Emerging and Developed 1 Interconnected Markets in the Americas Mixer trucks in the US
Slide 6: #1 or #2 Positions in Key Interconnected Markets in the Americas
#1 or #2 Positions in Key Emerging and Developed Interconnected Markets 1 in the Americas USA 49% of 3M16 revenues #2 RMC producer in US #2 cement producer in Southeast Capacity: 7.7 M tons cement & 13 M m3 RMC ~36% of Argos’ cement capacity ~74% of Argos’ RMC capacity CCA 21% of 3M16 reve
Slide 7: USA Regional Division
USA Regional Division Cement Plants RMC Areas Grinding Facilities Ports/Terminals Demand recovery driving operating Newberry Plant, Florida leverage and EBITDA margin normalization Strategically located plants close to high Revenues EBITDA Installed capacity growth and demand centers 49% 23% 7.7M
Slide 8: Colombia Regional Division
Colombia Regional Division Strategically located plants with nationwide coverage offer a strong competitive advantage Revenues EBITDA Installed capacity 30% 43% 9.5M tons Of 3M16 Of 3M16 Sogamoso Plant, Colombia 3.8M m 3 Sole producer with nationwide network serving Best Positioned to Capture the
Slide 9: Caribbean and Central America Regional Division
Caribbean and Central America Regional Division Operations concentrated in Honduras High long term growth prospects and strategic and Panama, with 45% and 52% market share (YE15) interconnection of all regions Only cement producer in Haiti, Suriname Revenues EBITDA Installed capacity and French
Slide 10: Flexible Operations with Vertical Integration and Extensive Logistics Network
Flexible Operations with Vertical Integration 2 and Extensive Logistics Network Newberry Plant, Florida, USA
Slide 11: One Interconnected Region
Broad logistics and distribution network provides flexibility from strategically located assets… One Interconnected Region USA plants & logistics network provide additional flexibility Harleyville Roberta Efficient cement plants with access to rail and sea Newberry Potential to supply Caribbean
Slide 12: Leveraging vertically integrated operations
.. leveraging vertically integrated operations Strategic resource Limestone ~25% of the production cost ~80% of the energy in Colombia Energy is self generated USA and Honduras ~20% of alternative fuels Geographical integration to supply our needs according Clinker to our market size 2nd in
Slide 13: Operating in Countries with Significant Growth Potential
Operating in Countries with Significant 3 Growth Potential Mixer trucks in USA
Slide 14: USA: Rapidly recovering cement market
USA: Rapidly recovering cement market USA demand per capita of 278 tons still below pre-bubble levels of 433 tons Argos is well-positioned to satisfy import requirements as demand normalizes and expand market share Cement Plants Grinding Facilities Ports/Terminals Residential sector maintains po
Slide 15: Colombia: Strong infrastructure and housing deficits
Colombia: Strong infrastructure and housing deficits… Large infrastructure deficit Residential and commercial construction deficit Ranking 2014/15 2012 estimated Growing & young population Spain 13 Housing deficit (units) Panama 40 Chile 50 Quantitative deficit: 0.6 M 80 + 75-79 +60% 70-74 below 3
Slide 16: Construction: 4G concessions and PPPs drive growth through 2024
… addressed by government & private investments are expected to drive strong growth through 2024 4G Concession Program: ~COP47 Tn investment in infrastructure Construction projects (moving ahead, more expected) GDP 2015 3.9%, above Phase 1: 9 projects awarded (COP11.4 Tn) 8 with financial closing
Slide 17: Argos plants, best positioned to serve phase I and II of 4G concession program
Argos plants, best positioned to serve phase I and II of 4G concession program Government funding for Phase I Capex Kms 12 projects already 1 Conexión Pacifico 2 FC 0.9 98 2 Honda - Girardot - Puerto Salgar FC 1.3 190 secured 3 Conexión Pacífico 1 FC 1.8 37 4 4 Cartagena - Barranquilla FC 1.0 147 5
Slide 18: Private public partnerships driving infrastructure growth
Private public partnerships driving infrastructure growth with minor public funding requirements 4 COP11.2 Tn* (USD4.8 Bn) 6 9 privately funded road infrastructure projects approved and 7 awarded in 2015 9 7 projects awarded = COP7 Tn* 5 7 1 2 Public Private Partnership Capex Kms 3 1 Ibagué - Cajama
Slide 19: +400,000 social houses to be built over the next years
+400,000 social houses to be built over the next 4 years Argos is best positioned to capture the opportunity: 65% share of free houses program in ’15 Strong presence in high growth emerging cities “Pipe 2 ” program: will add 61k social housing units (VIS) in 2016 and 69k in 2017 Free housing
Slide 20: CCA: Positive market dynamics with significant infrastructure projects underway
CCA: Positive market dynamics with significant infrastructure projects underway USA recovery driving growth in remittances across the region (Honduras +10% YTD June/15) Positive environment driven by government-sponsored infrastructure programs Significant benefits in lower oil prices as all c
Slide 21: Undertaking Strategic Investments to Further Enhance Efficiency and Competitiveness
Undertaking Strategic Investments to Further 4 Enhance Efficiency and Competitiveness Argos’ Innovation Center
Slide 22: Strategic Investments to Enhance Efficiency and Competitiveness
Undertaking Strategic Investments to Further Enhance Efficiency and 4 Competitiveness Organizational Excellence Program Initiatives 1 Intensify in the use of alternative fuels Increase use the % of additives in the 2 production of cement and RMC 3 Optimize capex allocation 4 Implement cost reduction
Slide 23: Track Record of Successfully Implementing Disciplined Growth Strategy
Track Record of Successfully Implementing 5 Disciplined Growth Strategy
Slide 24: Disciplined growth strategy driving EBITDA growth and value creation
Disciplined growth strategy driving EBITDA growth and value creation Revenues (COP Bn) EBITDA (COP Bn) EBITDA EBITDA Margin 7,912 1,600 1,519 29.0% 1,400 27.0% 5,817 1,200 4,968 978 968 25.0% 1,000 4,380 425 2,213 791 23.0% 3,668 800 682 3,023 1,653 600 539 19.7% 19.2% 21.0%307 18.6% 400 17.8% 18.1%
Slide 25: Disciplined growth strategy driving EBITDA expansion and value creation
Disciplined growth strategy driving EBITDA expansion and value creation Florida, USA – Vulcan Cement Investment Acquisitions for USD 720M +USD1.2 Tn (Asset acquisition) New assets: Since 2013 1.6 M tons Cement plant Grinding facility 1.9 M tons +25% RMC 3.3 M m3 Cement Blocks 109 M units/year volume
Slide 26: Healthy Financial Position and Flexibility to Pursue Growth
Healthy Financial Position and Flexibility to Pursue 6 Growth Harleyville Plant, USA
Slide 27: Strong balance sheet and healthy maturity profile
Strong balance sheet and healthy maturity profile… Net Debt / (EBITDA + Dividends) EBITDA / Financial expenses Strong balance sheet with solid 6.0x 5.9x debt ratios, 4.2x 3.7x 3.9x 5.0x 5.0x particularly in the 3.6x 3.5x 3.8x 3.2x 3.1x context of a US 3.7x 3.8x 1.9x low-cycle… 3.0x 2.3x 2.3x 2008 20
Slide 28: Investment portfolio provides financial flexibility to grow
… together with investment portfolio provide financial flexibility to grow organically and pursue strategic acquisitions Price per Share Value Value Company % Stake (COP) (COP million)* (USD million)* Grupo Suramericana 6.0% 39,900 1,124,512 372 Bancolombia 4.0% 24,700 504,798 167 Cartón Colombia 2.
Slide 29: Focus on Innovation and Sustainability
7 Focus on Innovation and Sustainability Argos’ Innovation Center, Colombia
Slide 30: Innovation: Pillar for our sustainable growth
Innovation Pillar for our of ‘15 revenues sustainable growth +10% from innovation Innovation Research and Alternative New management development resources businesses Technological routes for Safe, clean and final Corporate the future disposals entrepreneurship Use of resources leveraged in the c
Slide 31: Sustainability Policy
Sustainability Policy Profitability + Social development + Environmental impact 2015: Included for 3rd Received Silver Class Argos is 1 of 3 Argos is members of: consecutive year as distinction for 3rd cement companies consecutive year Siam Cement Group that are part of the Global Index 6 Colombian
Slide 32: Financial Highlights
Financial Highlights Sogamoso Plant, Colombia
Slide 33: Consolidated cement and RMC volume growth
Consolidated cement and RMC volume growth… Cement volume1 (mm MTPA) 14.3 12.6 11.4 CCA 10.8 37% Colombia 9.3 36% 7.8 3,447 USA 27% 3,238 2015 2016 2010 2011 2012 2013 2014 2015 1Q 2Q 2015 3Q 2016 4Q RMC volume (mm m3) 11.5 CCA 11.1 4% 9.4 8.5 Colombia 2,805 USA - SC 29% 7.0 29% 5.9 USA - SE 2,538 38
Slide 34: Strong revenue performance and cost savings initiatives
… result in strong revenue performance, which together with cost savings initiatives…, Revenues (COP Bn) 7,912 Others 0% 5,817 USA 4,968 21% 4,380 Colombia 3,668 2,213 30% 3,023 1,653 CCA 49% 2010 2011 2012 2013 2014 2015 2015 2016 USD M 1,710 2,075 2,437 2,656 2,833 2,881 1Q 2Q 1T 3Q 4Q Operating C
Slide 35: Operating leverage supporting EBITDA growth
…drive operating leverage and efficiencies supporting EBITDA growth, as we continue to invest in the business… EBITDA & EBITDA Margin (COP Bn) EBITDA EBITDA Margin 1,600 1,519 29.0% 1,400 27.0% USA 1,200 34% 978 968 25.0% 1,000 425 Colombia 791 23.0% 800 682 43% 307 600 539 19.7% 19.2% 21.0% 18.6% C
Slide 36: In Summary: Why Argos?
In Summary: Why Argos? A Leading Growing #1 or #2 Positions in Key Emerging and Developed 1 Interconnected Markets in the Americas Multinational Cement Company 2 Flexible Operations with Vertical Integration and Focused on Value Extensive Logistics Network Creation 3 Operating in Countries with Sign
Slide 37: Contact Information
CONTACT INFORMATION IR TEAM GUSTAVO URIBE [email protected] MANUELA RAMIREZ [email protected] ANA CASTAÑO [email protected] www.argos.co/ir This recognition, called Reconocimiento Emisores – IR is given by the Colombian Stock Exchange, Bolsa de Valores de Colombia S.A. It is not a recogn
Slide 38: Appendix
Appendix Modern Art Museum, Medellin, Colombia
Slide 39: Colombia: Focus on excellence
Colombia: Focus on excellence 1Q 2015 2016 Var Volumes Cement 000 MT 1,484 1,231 -254 -17.1% RMC 3 796 801 6 0.7% 000 m Cement dispatches down 17.1% vs. market decrease of -0.05%, reflection of price dynamics Lower volume growth in central region; expected to boost once 4G projects and Bogota’s
Slide 40: USA: better weather brightens up margins
USA: better weather brightens up margins 1Q 2015 2016 Var Volumes Cement 000 MT 635 935 300 47.3% RMC 000 m3 1,631 1,902 272 16.7% Double digit volume growth in both segments Strong volume by pent-up demand RMX with better weather grew 17% YoY 75% good days / business days during the period
Slide 41: CCA: market leader in Honduras and Panama
CCA: market leader in Honduras and Panama 1Q 2015 2016 Var Volumes Cement 000 MT 1,119 1,281 162 14.4% RMC 000 m3 112 102 -10 -9.3% 14% cement volume growth led by: Eastern Caribbean operations (+53%), trading (+45%) and exports (+30%) Cement market leader in Honduras and Panama Panama’s cemen
Slide 42: Cementos Argos S.A Corporate presentation
Cementos Argos S.A Corporate presentation 2016