Cementos Argos Sa · BVC:CEMARGOS
Cementos Argos Sa — Investor Presentation (2016)
45 slides from Cementos Argos Sa's investor presentation, 2016
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 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: 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 Interconnected Markets in the Americas
#1 or #2 Positions in Key Emerging and Developed Interconnected Markets 1 in the Americas USA 50% of 6M16 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 6M16
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 50% 29% Cem
Slide 8: Colombia Regional Division
Colombia Regional Division Strategically located plants with nationwide coverage offer a strong competitive advantage Revenues EBITDA Installed capacity 30% 39% 9.5M tons Of 6M16 Of 6M16 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: 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 ~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: Construction growth through 2024 and 4G Concession Program
… addressed by government and private investments are expected to drive strong growth through 2024 4G Concession Program: ~COP40 Tn investment in infrastructure Construction projects (moving ahead, more expected) GDP 1Q16 5.2%, 9 with financial closing Phase 1: 9 projects awarded (COP14.8 Tn) Argo
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 COP22.8 T n* (USD7.3 Bn) 6 9 privately funded road infrastructure projects approved and 8 awarded in 2016 9 8 projects awarded = COP20 Tn* 5 7 1 2 Public Private Partnerships Capex Kms 3 1 Ibagué - Caj
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
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 5 aspects: Tangible Results as of 2Q16 1. Operational Transformation: finding our Savings in fixed costs ~COP 20 Bn per year optimal network of plants in terms of efficiency by turning off the mill at the Sabanagrande an
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) 4,402 EBITDA EBITDA Margin 861 7,912 1,600 1,519 3,479 29.0% 1,400 678 2,189 27.0% 436 5,817 1,200 4,968 1,826 978 968 25.0% 1,000 371 4,380 791 23.0% 3,668 800 682 3,023 600 539 19.7% 19.2% 21.0%
Slide 25: Disciplined growth strategy driving EBITDA expansion: acquisitions
Disciplined growth strategy driving EBITDA expansion and value creation Acquisitions for WV, USA – Heidelberg Investment +USD1.9 Tn USD 660M (Asset acquisition) Since 2013 New assets: Cement plant 2.2 M tons 8 +31% Port/Terminal Cement volume Florida, USA – Vulcan Cement +19% Investment RMC volume U
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 5.0x debt ratios, 4.2x 4.6x 3.9x particularly in the 3.5x 3.8x 3.2x 3.1x context of a US 3.7x 3.8x 1.9x low-cycle… 3.0x 2010 2011 2012 2013 2014 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 Sura 6.0% 38,300 1,079,419 370 Bancolombia 4.0% 23,800 486,404 167 Cartón de Colombia 2.1% 5,
Slide 29: Focus on Innovation and Sustainability
7 Focus on Innovation and Sustainability Argos’ Innovation Center, Colombia
Slide 30: Innovation: pillar for 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
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 volume 6,982 6,843 (mm MTPA) YTD16 14.3 12.6 3,605 3,536 11.4 CCA 10.8 36% Colombia 9.3 35% 7.8 USA 3,447 29% 3,238 2015 2016 2010 2011 2012 2013 2014 2015 1Q 2Q 1T 3Q 2T 4Q RMC volume (mm m 3) 5,762 5,462 YTD16 11.5 11.1 2,956 CCA 9.4 2,923 4% 8.5 C
Slide 34: Strong revenue performance and cost savings initiatives
… result in strong revenue performance, which together with cost savings initiatives…, Revenues (COP Bn) 4,402 7,912 3,479 Others 2,189 0% 5,817 4,968 1,826 Colombia 4,380 30% 3,668 3,023 USA CCA 2,213 50% 1,653 20% 2010 2011 2012 2013 2014 2015 2015 2016 USD M 1,710 2,075 2,437 2,656 2,833 2,881 1Q
Slide 35: EBITDA growth and capital investments
…drive operating leverage and efficiencies supporting EBITDA growth, as we continue to invest in the business… EBITDA and EBITDA Margin (COP Bn) YTD16 EBITDA EBITDA Margin 861 1,600 1,519 29.0% 1,400 678 27.0% 436 USA 1,200 29% 978 968 25.0% Colombia 1,000 371 791 39% 23.0% 800 682 600 539 19.7% 19.
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 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 38: Appendix
Appendix Modern Art Museum, Medellin, Colombia
Slide 39: Colombia: Responsive strategy in pursuit of improving results
Colombia: Responsive strategy in pursuit of improving results in a challenging 2016 2Q YTD 2015 2016 Var 2015 2016 Var Volumes Cement 000 MT 1,434 1,236 -198 -13.8% 2,918 2,467 -451 -15.5% RMC 000 m3 909 834 -75 -8.2% 1,705 1,635 -69 -4.1% Cement dispatches -13.8% vs -0.42% of the market, affected
Slide 40: Colombian market: Infrastructure drives mid-term positive outlook
Colombian market: Infrastructure drives mid-term positive outlook We are positive about the Infrastructure 4G concession Positive variation in construction permits, boosted by Bogota’s performance program 1st wave: +33% YoY +90% YoY 9 awarded projects Colombia Bogota 8 projects with financial
Slide 41: USA: Historical EBITDA margin supported by market recovery
USA: Historical EBITDA margin supported by market recovery 2Q YTD 2015 2016 Var 2015 2016 Var Volumes Cement 000 MT 910 1,058 148 16.3% 1,545 1,993 448 29.0% RMC 000 m3 1,910 2,010 101 5.3% 3,540 3,913 373 10.5% Important volume growth, in both cement (+16.3%) and RMC (+5.3%), due to: Better wea
Slide 42: US housing sector recovery and potential growth
US housing sector recovery and potential growth in the medium term Construction spending and cement consumption: Almost all of our states are expected to perform above the national average, supporting our positive expectations Construction spending 1.153 1.210 Cement consumption 114.789 1.095 108.
Slide 43: CCA: Efficiencies improved margin
CCA: Efficiencies improved margin by 122 bps 2Q YTD 2015 2016 Var 2015 2016 Var Cement Volume 2Q16 Volumes Cement 000 MT 1,261 1,241 -20 -1.6% 2,380 2,522 142 6.0% RMC 000 m3 105 112 7 6.8% 217 213 -3 -1.5% 16% 18% Panama Honduras Haiti Cement volumes -1.6%, affected by trading (-34%) 17% 20% Dom.
Slide 44: CCA market: positive outlook due to ambitious plans
CCA market: positive outlook due to ambitious plans Honduras Panama Remittances (USD Bn) 3,4 3,1 2,9 2,9 2,7 2,6 2,6 2,5 2,5 2,4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Inter-American Development Bank. Panama Canal Remittances are expected to increase ~10% due to The canal expa
Slide 45: Cementos Argos S.A Corporate presentation
Cementos Argos S.A Corporate presentation 2016