Cementos Argos Sa · BVC:CEMARGOS
Cementos Argos Sa — Investor Presentation (2016)
48 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 and Central America Installed capacity: Cement 24 M tons* RMC 18 M m3 5-year CAGR (2010-2015) of 21% in revenues and 23% in EBITDA Included in the Dow Jones Global and Emerging Markets Sustainab
Slide 4: Argos: 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 in the Americas
#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 Markets in the Americas
#1 or #2 Positions in Key Emerging and Developed Interconnected Markets 1 in the Americas USA 49% of 9M16 revenues #2 RMC producer in the US #4 cement producer in the US Capacity: 9.9 M tons cement and 13 M m3 RMC ~42% of Argos’ cement capacity ~74% of Argos’ RMC capacity CCA 20% of 9M16 r
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 growth and demand centers Revenues EBITDA Installed capacity Cement ship
Slide 8: Colombia Regional Division
Colombia Regional Division Strategically located plants with nationwide coverage offer a strong competitive advantage Revenues EBITDA Installed capacity 31% 38% 9.5M tons Of 9M16 Of 9M16 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 54% and 45% 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 and logistics network provide Martinsburg additional flexibility Efficient cement plants with access to rail and sea Potential to supply Caribbean and Central Rob
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 4th 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 Cement Plants Grinding Facilities Ports/Terminals USA demand per capita of 278 tons still below pre-bubble levels of 433 tons Martinsburg Argos is well-positioned to satisfy import requirements as demand Wilmington normalizes Atlanta Harleyville Roberta Sava
Slide 15: Colombia: Strong infrastructure and housing deficits
Colombia: Strong infrastructure and housing deficits… Infrastructure deficit Residential and commercial construction deficit Ranking 2014/15 2012 estimated Growing and young population Spain 13 Housing deficit (units) Panama 40 Chile 50 Quantitative deficit: 0.6 M 80 + 75-79 +60% 70-74 below 35 Me
Slide 16: Infrastructure and government investment to drive growth through 2024
… addressed by government and private investments are expected to drive strong growth through 2024 4G Concession Program: ~COP41 Tn investment in infrastructure 12 Infrastructure projects (moving ahead, more expected) 10 with financial closing projects have Phase 1: 10 projects awarded (COP16.0 Tn
Slide 17: Argos plants, best positioned to serve 4G concession program
Argos plants, best positioned to serve phase I, II and III of 4G concession program Phase I Capex Kms 1 Conexión Pacifico 2 FC 1.4 98 2 Honda - Girardot - Puerto Salgar FC 1.6 190 310 3 Conexión Pacífico 1 FC 2.1 50 bridges 4 4 Cartagena - Barranquilla FC 1.7 159 5 Conexión Pacifico 3 FC 1.9 146 6 P
Slide 18: Private public partnerships driving infrastructure growth
Private public partnerships driving infrastructure growth with minor public funding requirements 4 COP 22.8 Tn* 6 (USD 7.3 Bn) 9 privately funded road infrastructure projects awarded in 2016 9 5 7 Public Private Partnerships Capex Kms 1 2 1 Ibagué - Cajamarca 1.8 225 2 Chirajara - Villavicencio 5.1
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 69k social housing units (VIS) in 2017 Free housing: 100k new homes
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 Positive environment driven by government-sponsored infrastructure programs Significant benefits in lower oil prices as all countries are net importers o
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: BEST Program to Further Enhance Efficiency and Competitiveness
4 BEST Program to Further Enhance Efficiency and Competitiveness BEST Program Building Efficiency and Sustainability for Tomorrow 5 areas of focus 1 2 3 4 5 Operational Improve Clinker / Alternative Administrative Reduce our Non- Transformation: Cement Ratio: Fuels: Synergies: Operating Asset Base:
Slide 23: BEST Program: Tangible Results as of 3Q16
4 BEST Program to Further Enhance Efficiency and Competitiveness Tangible Results as of 3Q16 Transformation of the Sabanagrande´s and San Expected savings in fix costs of The Shared Service Expected savings for 2017 Gil´s plants Center started operations ~COP 30 Bn/year ~USD 3.5 M Halt of the RMC On
Slide 24: Track Record of Successfully Implementing Disciplined Growth Strategy
Track Record of Successfully Implementing 5 Disciplined Growth Strategy
Slide 25: Disciplined growth strategy driving EBITDA growth and value creation
Disciplined growth strategy driving EBITDA growth and value creation Revenues (COP Bn) EBITDA (COP Bn) 6,513 1,256 5,760 EBITDA EBITDA Margin 7,912 2,111 1,600 1,519 1,104 29.0% 395 1,400 2,284 27.0%433 5,817 1,200 4,968 978 968 25.0% 2,189 1,000 4,380 791 436 23.0% 3,668 800 682 1,829 351 3,023 600
Slide 26: Disciplined growth strategy driving EBITDA expansion and value creation
Disciplined growth strategy driving EBITDA expansion and value creation Acquisitions for WV, USA – Heidelberg Investment +USD1.9 Bn USD 660M (Asset acquisition) Since 2013 New assets: Cement plant 2.2 M tons Port/Terminal 8 +31% Cement volume Florida, USA – Vulcan Cement +19% Investment RMC volume U
Slide 27: Healthy Financial Position and Flexibility to Pursue Growth
Healthy Financial Position and Flexibility to Pursue 6 Growth Harleyville Plant, USA
Slide 28: 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, 5.0x 4.2x 4.4x particularly in the 3.9x 3.5x 3.8x context of a US 3.2x 3.1x 3.7x 3.8x low-cycle… 3.0x 1.9x 2010 2011 2012 2013 2014 20
Slide 29: 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 Sura 6.0% 37,620 1,060,254 368 Bancolombia 4.0% 26,100 533,410 185 Cartón de Colombia 2.1% 5,
Slide 30: Focus on Innovation and Sustainability
7 Focus on Innovation and Sustainability Argos’ Innovation Center, Colombia
Slide 31: 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 32: Sustainability Policy
Sustainability Policy Profitability + Social development + Environmental impact As of September 2016: Included for 4th Received Silver Class Argos is 1 of 3 Argos is members of: consecutive year as distinction for 3rd cement companies consecutive year (YE 2015) Siam Cement Group that are part of the
Slide 33: Financial Highlights
Financial Highlights Sogamoso Plant, Colombia
Slide 34: Consolidated cement and RMC volume growth
Consolidated cement and RMC volume growth… Cement volume 10,685 10,543 YTD16 (mm MTPA) 14.3 3,843 3,561 12.6 CCA 11.4 36% Colombia 10.8 36% 9.3 3,536 7.8 3,605 USA 28% 3,238 3,447 2015 2016 2010 2011 2012 2013 2014 2015 1Q 1T2Q 2T3Q 3T 4Q RMC volume (mm m3) 8,685 8,602 YTD16 3,224 2,840 CCA 11.5 4%
Slide 35: Strong revenue performance and cost savings initiatives
… result in strong revenue performance, which together with cost savings initiatives…, Revenues YTD16 6,513 (COP Bn) 5,760 7,912 2,111 Others 2,284 0% 5,817 4,968 Colombia 4,380 2,189 31% 3,668 USA 1,829 49% 3,023 CCA 20% 2,213 1,647 2010 2011 2012 2013 2014 2015 2015 2016 USD M 1,710 2,075 2,437 2,
Slide 36: Operating leverage and efficiencies supporting EBITDA growth
…drive operating leverage and efficiencies supporting EBITDA growth, as we continue to invest in the business… EBITDA and EBITDA Margin (COP Bn) YTD16 1,256 EBITDA EBITDA Margin 1,600 1,519 1,104 29.0% 395 1,400 27.0% 433 USA 1,200 29% 978 968 25.0% Colombia 1,000 791 436 39% 23.0% 800 682 351 600 5
Slide 37: 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 38: Contact Information
CONTACT INFORMATION IR TEAM MANUELA RAMIREZ [email protected] CATALINA RICAURTE [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
Slide 39: Appendix
Appendix Modern Art Museum, Medellin, Colombia
Slide 40: 3Q16: Resilient results due to geographical diversification
3Q16: Resilient results due to our successful geographical diversification strategy 3Q YTD 2015 2016 Var 2015 2016 Var Key Figures Revenues COP Bn 2,284 2,111 -173 -7.6% 5,760 6,513 753 13.1% EBITDA COP Bn 433 395 -39 -8.9% 1,104 1,256 152 13.8% EBITDA margin % 19.0% 18.7% - 27.4 19.2% 19.3% 11.7 Ne
Slide 41: Consolidated volume: US volumes gaining importance
Consolidated volume: US volumes gaining importance 3Q YTD 2015 2016 Var 2015 2016 Var Volumes Cement 000 MT 3,843 3,557 -285 -7.4% 10,685 10,539 -146 -1.4% Colombia 000 MT 1,687 1,314 -373 -22.1% 4,606 3,781 -825 -17.9% USA 000 MT 958 1,012 55 5.7% 2,502 3,005 503 20.1% CCA* 000 MT 1,198 1,231 34 2.
Slide 42: Colombia: Infrastructure demand, the future upturn of the market
Colombia: Infrastructure demand, the future upturn of the market 3Q YTD 2015 2016 Var 2015 2016 Var Volumes Cement 000 MT 1,687 1,314 -373 -22.1% 4,606 3,781 -825 -17.9% RMC 000 m 3 1,063 809 -254 -23.9% 2,767 2,444 -323 -11.7% Cement dispatches -22.1% vs -11% of the industry, impacted partly by t
Slide 43: Colombia: Acceleration of efficiency amidst challenging conditions
Colombia: Acceleration of efficiency amidst challenging conditions 3Q YTD 2015 2016 Var 2015 2016 Var Key Figures Revenues COP Bn 838 663 -175 -20.9% 2,174 1,993 -181 -8.3% EBITDA COP Bn 237 169 -69 -29.0% 623 543 -80 -12.9% EBITDA margin % 28.3% 25.4% - 290.1 28.7% 27.3% - 142.0 Revenues and EBIT
Slide 44: USA: Increase in EBITDA margin due to operational leverage
USA: Increase in EBITDA margin due to operational leverage 3Q YTD 2015 2016 Var 2015 2016 Var Volumes Cement 000 MT 958 1,012 55 5.7% 2,502 3,005 503 20.1% RMC 000 m 3 2,050 1,924 -127 -6.2% 5,591 5,837 246 4.4% US continues on a recovery trend, with solid fundamentals. Cement consumption in the w
Slide 45: US infrastructure investments may boost the construction sector
US infrastructure required investments may boost the construction sector Construction Spending (2003-2016): 1.4 1.2 1.0 Since 2009, total construction spending 0.8 +19%, boosted by residential (+12%) while USD bn 0.6 public spending decreased (-13%) 0.4 0.2 In 2010, public spending represented 0
Slide 46: CCA: Long-term profitable investment
CCA: Long-term profitable investment 3Q YTD Cement Volume 3Q16 2015 2016 Var 2015 2016 Var Volumes 15% Cement 000 MT 1,198 1,231 34 2.8% 3,577 3,753 176 4.9% 26% Panama RMC 000 m 3 110 108 -3 -2.4% 327 321 -6 -1.8% Honduras 14% +2.8% cement volume growth led by Honduras (+6%), Haiti (+8%), and tra
Slide 47: CCA market: Infrastructure pipeline will drive the region
CCA market: Important infrastructure pipeline of projects will drive the region Honduras Panama Foreign Direct Investments (USD Bn) Foreign Direct Investments (USD Bn) 1.3 6.4 1.2 6.1 1.2 1.0 1.1 1.1 5.2 5.1 4.4 3.3 0.5 0.5 2.6 1.1 2009 2010 2011 2012 2013 2014 2015 2016E 2009 2010 2011 2012 2013 20
Slide 48: Cementos Argos S.A Corporate presentation
Cementos Argos S.A Corporate presentation 2016