Cementos Argos Sa · BVC:CEMARGOS
Cementos Argos Sa — Investor Presentation (2017)
49 slides from Cementos Argos Sa's investor presentation, 2017
Slide 1: Cementos Argos S.A Corporate presentation 2016
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 6-year CAGR (2010-2016) of 19% in revenues and 21% in EBITDA Included in the Dow Jones Global and Emerging Markets Sustainab
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 2 Flexible Operations with Vertical Integration and 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 Markets in the Americas
#1 or #2 Positions in Key Emerging and Developed Interconnected Markets 1 in the Americas USA 50% of 12M16 revenues #2 RMC producer in the US #4 cement producer in the US Capacity: 9.9 M tons cement and 13 M m 3 RMC ~42% of Argos’ cement capacity ~74% of Argos’ RMC capacity CCA 20% of 12M1
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 30% 36% 9.1M tons Of 12M16 Of 12M16 Sogamoso Plant, Colombia 3.8M m 3 Sole producer with nationwide network serving Best Positioned to Capture th
Slide 9: Caribbean and Central America Regional Division
Caribbean and Central America Regional Division High long term growth prospects and Operations concentrated in Honduras and strategic interconnection of all regions Panama, with 52% and 46% market share (YE16) Only cement producer in Haiti, Suriname and Revenues EBITDA Installed capacity 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: Broad logistics and distribution network provides flexibility
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 Energy USA ~14% of alternative fuels Honduras +20% of alternative fuels Geographical integration to supply our needs according Clinker to our market size 4th in installed capacity in the U
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 284 kgs still below pre-bubble levels of 433 kgs Martinsburg (YE15) Argos is well-positioned to satisfy Wilmington import requirements as demand Atlanta Harleyville normalizes Roberta
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: Government and private investments expected to drive strong growth through 2024
… addressed by government and private investments are expected to drive strong growth through 2024 Argos will supply 4G Concession Program: ~COP41 Tn investment in infrastructure projects (moving ahead, more expected) cement or RMC to: 10 with financial closing functional units Phase 1: 10 project
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 FC 1.6 190 310 3 Conexión Pacífico 1 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 T n* 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: Colombia Repunta: government plan
“Colombia Repunta”: recently released ambitious government plan The program will create ~765 k new jobs and will contribute ~1.3% to the total GDP in 2017 4G: Expected investment of COP 9.2 tn and 313k jobs generated in 2017 Tertiary roads: Expected investment of COP 1.3 tn for 11.6 k kms, gener
Slide 20: CCA: Positive market dynamics with significant infrastructure projects
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: 5 areas of focus
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 for FY16
4 BEST Program to Further Enhance Efficiency and Competitiveness Tangible Results for FY16 Transformation of the Sabanagrande´s and San Expected savings in fix costs of The Shared Service Expected savings for 2017 Gil´s plants ~COP 30 Bn/year Center started operations ~USD 3.5 M Halt of the RMC Ongo
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) 8,517 1,652 7,912 8,517 EBITDA EBITDA Margin 1,519 2,004 7,912 1,800 396 2,152 1,652 29.0%415 1,600 1,519 1,400 27.0% 5,817 2,111 395 4,968 2,284 1,200 25.0% 978 968 433 4,380 1,000 23.0% 3,668 791
Slide 26: Disciplined growth strategy driving EBITDA expansion: acquisitions
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 8 +33% Port/Terminal Cement Florida, USA – Vulcan Cement volume Investment +19% USD 720M (As
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 Increasing leverage reflects 6.0x 5.9x 5.0x Martinsburg 4.2x 4.4x 3.9x acquisition 3.5x 3.8x 3.2x 3.8x 3.8x 3.7x 1.9x Ongoing 3.0x divestment plan will recover ratios to target levels 2010
Slide 29: Investment portfolio provides financial flexibility
… 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% 38,200 1,076,601 359 Bancolombia 2.1% 25,220 274,582 92 Cartón de Colombia 2.1% 5,0
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 sustainable growth ~16% of ‘16 revenues came 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
Slide 32: Sustainability Policy Year 2016
Sustainability Policy Profitability + Social development + Environmental impact Year 2016 Included for 4th Received Gold Class Argos is 1 of 3 Argos is members of: consecutive year as distinction for 1st time (2016) cement companies Siam Cement Group that are part of the Global Index 5 Colombian com
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 14,327 13,984 YTD16 (mm MTPA) 3,642 3,441 14.3 14.0 CCA 12.6 35% 11.4 Colombia 10.8 3,843 3,561 36% 9.3 7.8 3,605 3,536 USA 29% 3,238 3,447 2010 2011 2012 2013 2014 2015 2016 2015 2016 1Q1T 2Q 2T 3Q 3T 4Q 4T RMC volume (mm m 3) YTD16 11,542 11
Slide 35: Strong revenue performance and cost savings
… result in strong revenue performance, which together with cost savings initiatives…, Revenues YTD16 8,517 (COP Bn) 7,912 8,517 7,912 2,004 Others 2,152 0% 5,817 2,111 Colombia 4,968 30% 4,380 2,284 USA 3,668 50% 2,189 3,023 CCA 1,829 20% 2,213 1,647 2010 2011 2012 2013 2014 2015 2016 2015 2016 USD
Slide 36: Operating leverage 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) 1,652 YTD16 EBITDA EBITDA Margin 1,519 1,800 1,652 396 29.0% 1,600 1,519 415 1,400 27.0% 395 USA 30% Colombia 1,200 25.0% 978 433 36% 968 1,000 23.0% 791 8
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 mramiezm@argos.com.co CATALINA RICAURTE cricaurte@argos.com.co ANA CASTAÑO acastanol@argos.com.co www.argos.co/ir This recognition, called Reconocimiento Emisores – IR is giv en 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: 4Q16: Consolidated results
4Q16: Consolidated results benefited from exposure to countries with different market cycles 4Q YTD 2015 2016 Var 2015 2016 Var Key Figures Revenues COP Bn 2,152 2,004 -148 -6.9% 7,912 8,517 605 7.7% EBITDA COP Bn 415 396 -19 -4.6% 1,519 1,652 133 8.7% EBITDA margin % 19.3% 19.7% 46.6 19.2% 19.4% 19
Slide 41: Consolidated volume: US volumes gaining importance
Consolidated volume: US volumes gaining importance 4Q YTD 2015 2016 Var 2015 2016 Var Cement 000 MT 3,642 3,441 -200 -5.5% 14,327 13,981 -346 -2.4% Colombia 000 MT 1,637 1,274 -363 -22.2% 6,243 5,055 -1,188 -19.0% USA 000 MT 853 969 116 13.6% 3,355 3,974 619 18.5% CCA * 000 MT 1,152 1,198 47 4.1% 4,
Slide 42: USA: Continues its recovery in volume and profitability
USA: Continues its recovery in terms of volume and profitability 4Q YTD 2015 2016 Var 2015 2016 Var Volumes Cement 000 MT 853 969 116 13.6% 3,355 3,974 619 18.5% RMC 000 m3 1,824 1,789 -35 -1.9% 7,414 7,626 211 2.9% Continuous market recovery: our cement volumes +13.6% and +18.5% FY16 (in Argos’ m
Slide 43: USA: Infrastructure, a future catalyst in a recovering market
USA: Infrastructure, a future catalyst in a recovering market Construction Spending (2005-2016): Residential Sector: main booster of cement consumption 1,400 recovery since 2012 USD (bn) Positive fundamentals: 1,200 Unemployment rate: Housing starts: 1.23 M, 1,000 4.7% reflects an doubling crisis le
Slide 44: Colombia: Construction cycle deceleration
Colombia: Construction cycle deceleration linked to economic and infrastructure performance 4Q YTD 2015 2016 Var 2015 2016 Var Volumes Cement 000 MT 1,637 1,274 -363 -22.2% 6,243 5,055 -1,188 -19.0% RMC 000 m3 935 777 -157 -16.8% 3,702 3,222 -480 -13.0% Industry cement volumes 4Q16 -9.5% as conseq
Slide 45: Colombia: Construction sector expected main driver of growth in 2017
Colombia: Construction sector, expected to be the main driver for economic growth in 2017 Economic Fundamentals : Tax reform positive for the Increase in tax revenues and stability of One-digit stabilized 1 country’s fiscal perspective, 2 sovereign rate are relevant for funding 3 unemployment rate e
Slide 46: CCA: Long-term growth prospects and interconnection
CCA: Long-term growth prospects and strategic interconnection of our regions 4Q YTD Cement Volume 4Q16 2015 2016 Var 2015 2016 Var Panama 20% 16% Volumes Honduras Cement 000 MT 1,152 1,198 47 4.1% 4,729 4,951 222 4.7% Haiti RMC 000 m3 99 104 5 5.4% 426 425 -1 -0.1% 20% Dom.Rep. 18% Others Cement v
Slide 47: Honduras and Panama: positive fiscal fundamentals
Honduras and Panama: positive fiscal fundamentals to promote infrastructure Honduras Panama Fiscal Deficit (2011-Sept 2016) Fiscal Deficit (2011-Sept 2016) 2011 2012 2013 2014 2015 sep.-16 2011 2012 2013 2014 2015 sep.-16 +0.50% -1.10% -2.50% -1.50% -3.70% -1.70% -3.90% -2.20% -2.30% -2.40% -7.10% -
Slide 48: Strong balance sheet and healthy maturity profile
Strong balance sheet and healthy maturity profile Net Debt / (EBITDA + Dividends) EBITDA / Financial expenses Increasing leverage 6.0x 5.9x 5.0x reflects Martinsburg 4.2x 4.4x 3.9x 3.5x 3.8x acquisition 3.2x 3.8x 3.8x 3.7x 1.9x 3.0x Ongoing divestment plan will recover ratios to target levels 2010 2
Slide 49: Cementos Argos S.A Corporate presentation
Cementos Argos S.A Corporate presentation 2016