Slide 1: Cementos Argos S.A Corporate presentation 2018
Cementos Argos S.A Corporate presentation 2018
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 23 M tons ▪ RMC 18 M m3 ▪ 6-year CAGR (2010-2017) of 15% in revenues and 13% in EBITDA ▪ Included in the Dow Jones Global and Emerging Markets Sustainabi
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 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 Interconnected Markets in the Americas
#1 or #2 Positions in Key Emerging and Developed Interconnected Markets 1 in the Americas USA 53% of 12M17 revenues ▪ #2 RMC producer in the US ▪ #4 cement producer in the US ▪ Capacity: 9.6 M tons cement and 13 M m3 RMC ▪ ~42% of Argos’ cement capacity ▪ ~74% of Argos’ RMC capacity CCA 20% of 12M17
Slide 7: USA Regional Division
USA Regional Division Cement Plants RMC Areas Grinding Facilities Ports/Terminals Demand recovery driving operating leverage Newberry Plant, Florida and EBITDA margin normalization ▪ Strategically located plants close to high growth Revenues EBITDA Installed capacity and demand centers 53% 45% 9.6M
Slide 8: Colombia Regional Division
Colombia Regional Division Strategically located plants with nationwide coverage offer a strong competitive advantage Revenues EBITDA Installed capacity 27% 22% 8.7M tons Of 12M17 Of 12M17 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 Panama, with 50% and 44% market share strategic interconnection of all regions (YE17) ▪ 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 Roberta Harleyville ▪ Potential to supply Carib
Slide 12: Leveraging vertically integrated operations
... leveraging vertically integrated operations Strategic resource Limestone ▪ ~25% of the production cost Energy ▪ USA ~9.6% of alternative fuels ▪ Honduras ~17% of alternative fuels Geographical integration to supply our needs according Clinker to our market size ▪ 4th in installed capacity in the
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 285 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 Mex
Slide 16: 4G concession program to address Colombia's infrastructure needs
4G concession program to address Colombia`s infrastructure needs... Phase I Capex* Kms 1 Conexión Pacifico 2 2.6 98 4 2 Honda - Girardot - Puerto Salgar 2.4 190 310 3 Conexión Pacífico 1 3.2 50 bridges 4 Cartagena - Barranquilla 3.0 159 3 5 Conexión Pacifico 3 3.5 146 6 Perimetral del Oriente de Cun
Slide 17: Infrastructure development under public private partnerships
Infrastructure development under private public partnerships, with minor public funding requirements 4 COP 22.8 Tn* 6 (USD 7.3 Bn) 3 privately funded road infrastructure projects under construction in 2017 9 5 7 Public Private Partnerships Capex Kms 1 2 1 Ibagué - Cajamarca 2.5 225 2 Chirajara - Vil
Slide 18: Colombia: 4G and infrastructure in main cities to offset residential deceleration
Colombia: 4G and infrastructure in main cities to offset the deceleration of the residential market First wave of 4G projects, already with 8 disbursements and under execution Project execution % Already disbursed Infrastructure and transportation approved budget (COP Tn) +COP 4 TN 66.2% Pacífico 1
Slide 19: Caribbean and Central America: healthy growth on a diverse region
Caribbean and Central America: healthy growth on a diverse region GDP (% variation YoY) 6.1% 5.0% 3.6% 3.6% 3.4% 3.0% 2.1% 0.8% Dominica Dominican Guyana Haiti Honduras Panama Suriname Average Republic 2018 2019 2020 2021 2022 Honduras: program to close the residential Panama: for 2018 it is expecte
Slide 20: Undertaking Strategic Investments to Further Enhance Efficiency and Competitiveness
Undertaking Strategic Investments to Further 4 Enhance Efficiency and Competitiveness Argos’ Innovation Center
Slide 21: 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 6 Operational Improve Clinker / Alternative Administrative Reduce our Go to Market Transformation: Cement Ratio: Fuels: Synergies: Non-Operatin
Slide 22: Track Record of Successfully Implementing Disciplined Growth Strategy
Track Record of Successfully Implementing 5 Disciplined Growth Strategy
Slide 23: Disciplined growth strategy driving EBITDA growth and value creation
Disciplined growth strategy driving EBITDA growth and value creation Revenues (COP Bn) EBITDA* (COP Bn) 0.2% 2,004 2,107 398 8,517 8,533 7,912 EBITDA 1800 1,672 50.0% 362 1,519 45.0% 398 1600 5,817 2,111 2,194 1,422 40.0% 1400 4,968 407 35.0% 4,380 1200 978 968 30.0% 3,668 1000 2,189 791 25.0% 439 2
Slide 24: 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 +33% Cement volume Florida, USA – Vulcan Cement Investment +19% USD 720M (As
Slide 25: Healthy Financial Position and Flexibility to Pursue Growth
Healthy Financial Position and Flexibility to Pursue 6 Growth Harleyville Plant, USA
Slide 26: Debt structure as of December 31st
Debt structure as of December 31st * Leverage reflects the acquisition of Martinsburg Ongoing divestment plan to reach a leverage ratio between 3.5x to 3.6x in 2018 *This ratio is different from the Net Debt / (Ebitda + Dividends) used in the financial contracts, which excludes some leasings and non
Slide 27: 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 6.01% 40,300 1,135,785 381 Cartón de Colombia 2.14% 5,430 12,537 4 Total 1,148,323 385 *
Slide 28: Focus on Innovation and Sustainability
7 Focus on Innovation and Sustainability Argos’ Innovation Center, Colombia
Slide 29: Innovation: pillar for our sustainable growth
Innovation Pillar for our sustainable growth ~20.7% offrom ‘17 revenues came 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 30: Sustainability Policy
Sustainability Policy Profitability + Social development + Environmental impact Year 2017 Argos is 1 of 3 Argos is members of: cement companies Siam Cement Group that are part of the Included for 5th Received Gold Class Global Index consecutive year as distinction for 2nd time 5 Colombian companies
Slide 31: Financial Highlights
Financial Highlights Sogamoso Plant, Colombia
Slide 32: Consolidated cement and RMC volume growth
Consolidated cement and RMC volume growth… Cement volume 4,042 (mm MTPA)18 17 3,441 YTD17 16 14.3 4,223 14 14 12.6 3,557 11.4 12 10.8 Colombia USA 10 9.3 4,169 36% 31% 3,536 8 6 CCA 33% 4 3,447 3,842 2 0 2016 2017 2011 2012 2013 2014 2015 2016 2017 1Q 2Q 3Q 4Q RMC volume (mm m3) 2,671 14 2,567 YTD17
Slide 33: EBITDA and EBITDA margin; capital investments
…drive operating leverage and efficiencies supporting EBITDA growth, as we continue to invest in the business… EBITDA and EBITDA Margin (COP Bn) EBITDA Margen EBITDA 398 1800 1,672 50.0% YTD17 362 1,519 45.0% 1,422 1600 1400 40.0% 398 35.0% 1200 Colombia 978 968 30.0% 407 USA 1000 23% 791 25.0% 45%
Slide 34: 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 35: Contact Information
CONTACT INFORMATION IR TEAM MANUELA RAMIREZ mramiezm@argos.com.co CATALINA RICAURTE cricaurte@argos.com.co 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 recognition that certifies the qual
Slide 36: Appendix
Appendix Modern Art Museum, Medellin, Colombia
Slide 37: Cementos Argos Results 4Q17
Cementos Argos Results 4Q17 Cementos Argos has a privileged network of assets in the US Region 37
Slide 38: 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 39: 4Q17 Highlights
4Q17 Highlights ▪ Delivering on our divestment plan ‒ Completed the sale of the block business assets, acquired in 2014 ‒ Sale of self-generation plants in Colombia, on track ▪ USA, positive outlook improved after the tax reform with a non-cash, one-off impact ‒ Reduction of the federal corporate ta
Slide 40: Consolidated Results
Cement plant, Sogamoso - Colombia 1 Consolidated Results
Slide 41: 4Q17: BEST program and diversification strategy key for gradual recovery
4Q17: BEST program and diversification strategy, key for 1 ending 2017 with a gradual recovery 4Q YTD 2016 2017 Var 2016 2017 Var Key Figures Revenues COP Bn 2,004 2,107 5.1% 8,517 8,533 0.2% EBITDA COP Bn 398 362 -8.9% 1,672 1,422 -15.0% Adjusted EBITDA** COP Bn 398 375 -5.6% 1,672 1,479 -11.5% EBI
Slide 42: Consolidated volume: growing cement dispatches
Consolidated volume: growing cement dispatches driven by 1 the US and the Caribbean and Central América 4Q YTD 2016 2017 Var 2016 2017 Var Cement 000 MT 3,436 4,042 17.6% 13,976 16,275 16.5% Colombia 000 MT 1,274 1,258 -1.3% 5,055 5,343 5.7% USA 000 MT 964 1,468 52.3% 3,969 5,867 47.8% CCA 000 MT 1,
Slide 43: USA Region
Argos present in US infrastructure projects, Margaret Bridge 2 USA Region 43
Slide 44: USA: solid results derived from the cement business
USA: solid results derived from the performance of the cement 2 business 4Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 964 1,468 52.3% 3,969 5,867 47.8% RMC 000 m3 1,789 1,761 -1.6% 7,626 7,154 -6.2% ▪ Solid cement volumes +52.3% excluding Martinsburg: +20% (whole US market +4.7% QTD as o
Slide 45: USA: consolidation of residential market and infrastructure progress
USA: consolidation of residential market and progress of 2 infrastructure segment Construction spending driven by public investment Construction spending (% variation YoY) 25% 20% 15% 10% Public 5% Spending 0% +900 bps From the -5% minimum in June -10% 04/2014 07/2014 10/2014 01/2015 04/2015 07/2015
Slide 46: Colombia Region
Argos present in 4G projects. Conexión vial Yati 3 Colombia Region 46
Slide 47: Colombia: leaner operations and delivery on efficiency goals
Colombia: leaner operations and delivery on efficiency 3 goals on a transformational year 4Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 1,274 1,258 -1.3% 5,055 5,343 5.7% RMC 000 m3 777 701 -9.8% 3,222 2,992 -7.1% ▪ Argos’ cement volumes -1.3% compared to -0.6% of the industry ▪ Lower mar
Slide 48: Colombia: 4G and infrastructure in main cities
Colombia: 4G and infrastructure in main cities to offset the 3 deceleration of the residential market First wave of 4G projects, already with 8 disbursements and under execution Project execution % Already disbursed Infrastructure and transportation approved budget (COP Tn) +COP 4 TN 66.2% Pacífico
Slide 49: Caribbean and Central America Region
Cementos Argos, present in infrastructure projects in Panama 4 Caribbean and Central America Region 49
Slide 50: Caribbean and Central America: growing volumes in markets with positive outlook
Caribbean and Central America: growing volumes in markets 4 with a positive outlook 4Q YTD 2016 2017 Var 2016 2017 Var Volumes Total Cement 000 MT 1,198 1,316 9.8% 4,951 5,065 2.3% Local markets 000 MT 745 856 14.9% 3,179 3,463 8.9% Trading and Exports 000 MT 453 460 1.6% 1,772 1,602 -9.6% RMC 000 m
Slide 51: Caribbean and Central America: healthy growth on a diverse region
Caribbean and Central America: healthy growth on a diverse 4 region GDP (% variation YoY) 6.1% 5.0% 3.6% 3.6% 3.4% 3.0% 2.1% 0.8% Dominica Dominican Guyana Haiti Honduras Panama Suriname Average Republic 2018 2019 2020 2021 2022 Honduras: program to close the residential Panama: for 2018 it is expec
Slide 52: Balance Sheet
5 Balance Sheet 52
Slide 53: Debt structure as of December 31st 2017
5 Debt structure as of December 31st 2017 * Leverage reflects the acquisition of Martinsburg Ongoing divestment plan to reach a leverage ratio between 3.5x to 3.6x in 2018 *This ratio is different from the Net Debt / (Ebitda + Dividends) used in the financial contracts, which excludes some leasings
Slide 54: Debt profile as of December 31st 2017
5 Debt profile as of December 31st 2017 Short term (USD 630 M) 200 180 160 140 120 100 186 80 144 60 118 40 33 76 20 33 9 2 1 1 1 9 19 0 ene-18 feb-18 mar-18 abr-18 may-18 jun-18 jul-18 ago-18 sep-18 oct-18 nov-18 dic-18 Bank Loans Bonds Long term (USD 1,803 M) Average debt life: 4.92 years 54
Slide 55: Argos 2018 outlook
5 Argos 2018 outlook Consolidated EBITDA guidance FY18 Expected CAPEX FY18 ~COP 1.8 – 1.9 Tn USD 150 -170 M Operating (includes maintenance) (including divestments) ~USD 90 M Sogamoso commitments* USA ▪ USD 270 – 280 M EBITDA Guidance FYE ▪ Continuous recovery of market driven by residential sector
Slide 56: Appendix
Applied concrete 6 Appendix 56
Slide 57: Summary per regional division / other businesses
6 Summary per regional division / other businesses Revenues Adjusted EBITDA* 4Q16 4Q17 Var 4Q16 Mgn (%) 4Q17 Mgn (%) COP Bn Colombia 602 544 -9.7% 124 20.6% 115 21.2% USA 1,015 1,131 11.4% 131 12.9% 211 18.7% CCA 387 430 11.2% 186 48.0% 106 24.6% Subtotal 2,004 2,104 5.0% 441 22.0% 432 20.5% Corpora
Slide 58: Operating profit and EBITDA (COP and USD)
6 Operating profit and EBITDA (COP and USD) Revenues Adjusted EBITDA* 2016 2017 Var 2016 Mgn (%) 2017 Mgn (%) COP Bn Colombia 2,595 2,270 -12.5% 668 25.7% 415 18.3% USA 4,238 4,547 7.3% 553 13.0% 717 15.8% CCA 1,682 1,712 1.8% 646 38.4% 514 30.0% Subtotal 8,515 8,529 0.2% 1,867 21.9% 1,646 19.3% Cor
Slide 59: Consolidated Cash Flow (COP Bn)
6 Consolidated Cash Flow (COP Bn) Cash flow (COP Mill) Total EBITDA 1,422,238 (+) Net Op. Working Capital 80,893 (-) Maintenance CAPEX 374,881 (-) Profitability CAPEX 198,512 (-) Taxes 305,091 Total Free Cash Flow 543,449 Financial Cash Flow (+) Net Finacial Expenses (407,864) (-) Net Dividends (387
Slide 60: Investment portfolio improves Argos' financial flexibility
6 Investment portfolio improves Argos´ financial flexibility Price per Share* Value Value Company % Stake (COP) (COP million) (USD million) Grupo Sura 6.01% 40,300 1,135,785 381 Cartón de Colombia 2.14% 5,430 12,537 4 Total 1,148,323 385 *Argos holds a stake of the common shares. Note: FX Rate as of
Slide 61: Contact Information
Ready-mix textures CONTACT INFORMATION IR TEAM MANUELA RAMIREZ mramirezm@argos.com.co CATALINA RICAURTE cricaurte@argos.com.co www.argos.co/ir This recognition, called Reconocimiento Emisores – IR is given by the Colombian Stock Exchange, Bolsa de Valores de Permeable RMC Colombia S.A. It is not a r