Slide 1: Cementos Argos S.A Corporate presentation 2017
Cementos Argos S.A Corporate presentation 2017
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 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 52% of 6M17 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 6M17 r
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 52% 40% 9.9M
Slide 8: Colombia Regional Division
Colombia Regional Division Strategically located plants with nationwide coverage offer a strong competitive advantage Revenues EBITDA Installed capacity 28% 23% 9.1M tons Of 6M17 Of 6M17 Sogamoso Plant, Colombia 3.8M m 3 Best Positioned to Capture the Infrastructure and Sole producer with nationwi
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) Revenues EBITDA Installed capacity Only cement producer in Haiti, Suriname 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 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 1.4 98 2 Honda - Girardot - Puerto Salgar 1.6 190 310 3 Conexión Pacífico 1 2.1 50 bridges 4 4 Cartagena - Barranquilla 1.7 159 5 Conexión Pacifico 3 1.9 146 6 Perimetral del Oriente de Cundin
Slide 17: Argos is the leader in dispatches for the 4G projects
…Argos is the leader in dispatches for the 4G projects FU* Argos FU* FU* FU* in awarded to MKT Total Awarded negotiation Argos Share Total 4G 102 56 39 46 69,6% Other projects* 85 22 15 63 68,2% Total 187 78 54 109 69,2% 5 New functional units (FU) awarded during 2Q17 FU= Functional Unit: Each proje
Slide 18: Infrastructure development under private public 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 1.8 225 2 Chirajara - Vil
Slide 19: Residential market supported by governmental programs
Residential market supported by governmental programs... Programs for social housing segment Mi casa ya 5 p.p Mi casa ya 4 p.p Interest 5 p.p VIP* Interest rate Interest rate 1 rate 2 ahorradores subsidy 3 cuota inicial subsidy subsidy VIP (COP 0-51.6M) COP 22M VIS (COP 51.6–99.6 M) COP 14.7M 4 p.p
Slide 20: Additional initiatives launched to boost the construction sector
…and recent additional initiatives launched to boost the construction sector FNA (National savings fund) For regular and social Terms up to 30 years Housing housing with purchase option Ahorra tu Leasing MCY* subsidies available arriendo Payment of Unemployment monthly fee Financing 100% ins
Slide 21: CCA: Positive market dynamics with significant infrastructure projects underway
CCA: Positive market dynamics with significant infrastructure projects underway Honduras Panama Public core investments for 2017: Public core investments for 2017: Public Projects Private projects Metro Housing Free Trade Zone USD 90 M USD 1,100 M USD 660 M USD 320 M USD 230 M Tegucigalpa San Pedro
Slide 22: Undertaking Strategic Investments to Further Enhance Efficiency and Competitiveness
Undertaking Strategic Investments to Further 4 Enhance Efficiency and Competitiveness Argos’ Innovation Center
Slide 23: 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 24: BEST Program starting to materialize in our results
4 BEST Program starting to materialize in our results Transformation: 1 Operational Sabanagrande San Gil BEST efforts materialized in our results in Colombia: Transformation Cartagena wet kiln 2 Improve Clinker / Cement Ratio Investments on their way to implement blending options 7 USD/MT Ca
Slide 25: Track Record of Successfully Implementing Disciplined Growth Strategy
Track Record of Successfully Implementing 5 Disciplined Growth Strategy
Slide 26: 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 EBITDA EBITDA Margin 7,912 2,189 1,800 436 2,154 1,652 29.0% 1,600 1,519 1,400 27.0% 5,817 367 4,968 1,200 25.0% 978 968 4,380 1,000 23.0% 3,668 791 800 682 19.4% 21.0% 3,023 19.7% 539 19.2%
Slide 27: 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 28: Healthy Financial Position and Flexibility to Pursue Growth
Healthy Financial Position and Flexibility to Pursue 6 Growth Harleyville Plant, USA
Slide 29: Strong balance sheet and adequate currency mix
Strong balance sheet and adequate currency mix 5.9 x 6.0 x 5.0 x Leverage reflects the 4.2x 4.4 x 4.4x 3.6x 3.9x 3.8 x acquisition of Martinsburg 3.7x 3.7x 3.7x 3.5x 3.8x 3.8x Negotiated waiver with banks 3.0x 3.2x 2.3 x 2.3x 1.9x and ongoing divestment plan to reach a leverage ratio 2008 2009 2010
Slide 30: Investment portfolio provides financial flexibility to grow
… together with investment portfolio provide financial flexibility to grow organically and pursue strategic acquisitions * Argos holds a stake of the common shares. Inorganic Undertaking Strategic Investments 1% growth to Further Enhance Efficiency and strategy Competitiveness Defined 99% core geogr
Slide 31: Focus on Innovation and Sustainability
7 Focus on Innovation and Sustainability Argos’ Innovation Center, Colombia
Slide 32: Innovation: pillar for our sustainable growth
Innovation Pillar for our sustainable growth ~16% offrom ‘16 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 t
Slide 33: Sustainability Policy
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 34: Financial Highlights
Financial Highlights Sogamoso Plant, Colombia
Slide 35: Consolidated cement and RMC volume growth
Consolidated cement and RMC volume growth… Cement volume (mm MTPA) YTD17 4,169 14.3 14.0 3,536 12.6 11.4 CCA 10.8 31% Colombia 9.3 33% 7.8 3,842 USA 3,447 36% 2016 2017 2010 2011 2012 2013 2014 2015 2016 1Q 2Q RMC volume (mm m3) YTD17 11.5 11.3 11.1 2,956 9.4 2,719 8.5 Colombia 7.0 29% 5.9 USA - SE
Slide 36: Strong revenue performance with cost savings initiatives
… result in strong revenue performance, which together with cost savings initiatives…, Revenues (COP Bn) 8,517 7,912 YTD17 2,189 2,154 5,817 CCA 4,968 20% 4,380 Colombia 28% 3,668 3,023 USA 52% 2,213 2,077 2010 2011 2012 2013 2014 2015 2016 USD M 1,710 2,075 2,437 2,656 2,833 2,881 2,790 2016 2017 1
Slide 37: 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) EBITDA EBITDA Margin 1,800 1,652 29.0% YTD17 1,600 1,519 436 1,400 27.0% 1,200 25.0% 978 367 968 Colombia 1,000 23.0% 791 USA 23% 800 682 19.4% 19.7% 21.0%
Slide 38: 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 39: 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 40: Appendix
Appendix Modern Art Museum, Medellin, Colombia
Slide 41: 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 42: 2Q17 Highlights
2Q17 Highlights Successful COP 1 Tn bond placement in the Colombian market Increased debt average life by two years Ratified appetite of the market with 1,3x bid to cover and attractive CPI linked interest rates Inside the fence generation assets divestment Environmental diversity process ad
Slide 43: Consolidated Results
Cementos Argos present in the US highways Verde Argos R: 186 R G: 212 G B: 5 B R: 139 R G: 183 G B: 63 B R: 176 R G: 211 G B: 99 B R: 4 R G: 176 G B: 79 B R: 106 R G: 189 G B: 69 B 1 Consolidated Results
Slide 44: 2Q17: Consolidated results benefited from BEST implementation
2Q17: Consolidated results benefited from BEST 1 implementation and our diversified footprint 2Q YTD 2016 2017 Var 2016 2017 Var Key Figures Revenues COP Bn 2,189 2,154 -35 -1.6% 4,402 4,231 -171 -3.9% EBITDA COP Bn 436 367 -70 -15.9% 861 641 -221 -25.6% EBITDA margin % 19.9% 17.0% -290.9 19.6% 15.1
Slide 45: Consolidated volume: cement volume growth across all regions
Consolidated volume: cement volume growth across all 1 our regions 2Q YTD 2016 2017 Var 2016 2017 Var Cement 000 MT 3.536 4.169 633 17,9% 6.982 8.010 1.028 14,7% Colombia 000 MT 1.236 1.322 85 6,9% 2.467 2.679 212 8,6% USA 000 MT 1.058 1.545 487 46,1% 1.993 2.886 893 44,8% CCA 000 MT 1.241 1.302 61
Slide 46: USA Region
Logistics network in Newberry plant, USA Region 2 USA Region 46
Slide 47: USA: Continuous EBITDA margin improvement led by cement
USA: Continuous EBITDA margin improvement led by 2 the cement business 2Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 1.058 1.545 487 46,1% 1.993 2.886 893 44,8% RMC 000 m3 2.010 1.841 -169 -8,4% 3.913 3.578 -334 -8,5% Argos’ cement volumes +46%; excluding Martinsburg: +5,5% (whole US ma
Slide 48: Cement demand driven by residential sector and infrastructure
Cement demand driven by residential sector and 2 infrastructure is the future catalyst Sustained upward trend in residential Driving recovery in cement consumption leading indicators CAGR market: 3,8% CAGR Argos states: 5,5%* * 5Yr CAGR Infrastructure: mid-term driver with significant investments Re
Slide 49: Colombian Region
Cartagena plant, Colombia 3 Colombian Region 49
Slide 50: Colombia: BEST efforts materialized in costs reduction
Colombia: BEST efforts materialized in costs reduction 3 during the quarter 2Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 1.236 1.322 85 6,9% 2.467 2.679 212 8,6% RMC 000 m3 834 767 -67 -8,1% 1.635 1.549 -86 -5,3% Industry cement volumes -5,8% in 2Q17 YoY Cement imports reduced by 47%
Slide 51: Argos, leader in infrastructure dispatches for 4G
Argos, leader in infrastructure 3 Dispatches for 4G are a starting to materialize FU* Argos FU* FU* FU* in awarded to MKT Total Awarded negotiation Argos Share Total 4G 102 56 39 46 69,6% Other projects* 85 22 15 63 68,2% Total 187 78 54 109 69,2% 5 New functional units (FU) awarded during 2Q17 FU=
Slide 52: Residential market: social housing supported by governmental programs
Residential market: social housing supported by 3 governmental programs 12M New home sales May 2017 (units) 12M Housing starts May 2017 (units) +1,3% -6,4% -3,7% +15% -5,9% +1,8% 160,000 182,330 200,000 142,943 145,516 180,000 175,523 140,000 160,000 120,000 140,000 119,404 100,000 90,532 120,000 11
Slide 53: Central America and Caribbean Region
Panamá plant 4 Central America and Caribbean Region 53
Slide 54: Stable results in a geographically diverse region
4 Stable results in a geographically diverse region 2Q YTD 2016 2017 Var 2016 2017 Var Panama Volumes 14% 17% Honduras Total Cement 000 MT 1,241 1,302 61 4.9% 2,522 2,445 -77 -3.0% Haiti 17% Local markets 000 MT 836 891 55 6.5% 1,608 1,730 121 7.6% 23% Dom. Rep Trading and Exports 000 MT 405 411 6 1
Slide 55: Markets driven by the recovery of economic indicators
4 Markets driven by the recovery of economic indicators Honduras: market with high needs in infrastructure and housing IMAE* Construction Index (Var YTD May17) 260.000 m2 6.0% 4.6% Building permits Residential +11% 4.0% 2.3% 2.0% (YTD Apr17) 0.0% -2.0% -4.0% +1 M housing units required for the next
Slide 56: Balance Sheet
Applied concrete 5 Balance Sheet 56
Slide 57: Strong balance sheet and adequate currency mix
5 Strong balance sheet and adequate currency mix 5.9 x Leverage reflects the 6.0 x 5.0 x 4.4 x 4.4x acquisition of Martinsburg 3.7x 3.6x 3.9x 4.2x 3.8 x 3.5x 3.7x 3.7x 3.8x Negotiated waiver with 3.0x 3.8x 3.2x banks and ongoing 2.3 x 2.3x 1.9x divestment plan to reach a 2008 2009 2010 2011 2012 201
Slide 58: Healthy maturity profile debt as of June 30th, 2017
Strong balance sheet and healthy maturity profile 5 debt as of June 30th, 2017 Short term: USD 742 M 400 350 300 181 250 200 150 100 185 141 50 78 83 0 9 1 1 18 9 1 1 1 jul-17 aug-17 sep-17 oct-17 nov-17 dec-17 jan-18 feb-18 mar-18 apr-18 may-18 jun-18 Banks Loans Bonds Long term: USD 1.700 M 500 23
Slide 59: Argos 2017 outlook
5 Argos 2017 outlook ~ USD 150 – 170 M Maintenance Consolidated EBITDA Guidance FY17: Expected CAPEX FY17: ~ USD 90 M Commitments (Sogamoso) ~COP 1,8 – 2,0 tn ~USD 280–300 M ~ USD 40 M Strategic USA: Colombia: CCA: Continuous recovery of market driven Construction sector, to improve in S
Slide 60: Appendix
Applied concrete 6 Appendix 60
Slide 61: Summary per regional division / other businesses
6 Summary per regional division / other businesses Ingresos EBITDA Mgn 2T16 2T17 Var 2T16 2T17 Mgn (%) Var (%) COP MM Colombia 665 563 -101 -15,3% 170 25,6% 81 14,4% -89 -52,3% USA 1.095 1.160 65 6,0% 166 15,1% 194 16,7% 28 16,9% CCA 429 430 1 0,3% 149 34,8% 136 31,6% -13 -8,9% Subtotal 2.189 2.154
Slide 62: Operating profit and EBITDA (COP and USD)
6 Operating profit and EBITDA (COP and USD) 2Q YTD 2016 2017 Var 2016 2017 Var Key Figures Revenues COP Bn 2.189 2.154 -35 -1,6% 4.402 4.231 -171 -3,9% COGS & SG&A COP Bn 1.898 1.960 62 3,3% 3.849 3.957 108 2,8% Operating Profit COP Bn 291 194 -97 -33,2% 553 274 -279 -50,4% EBITDA COP Bn 436 367 -70
Slide 63: Consolidated Cash Flow (COP Bn)
6 Consolidated Cash Flow (COP Bn) Cash Flow 583 Cash flow (COP Mill) Total at Jan. 2017 Cash EBITDA +619 EBITDA 640.837 Net Op. (+) Non Cash Adjustments (22.186) -95 Working Capital Cash EBITDA 618.651 Maintenance (+) Net Op. Working Capital (94.753) -241 CAPEX (-) Maintenance CAPEX 240.846 Profitab
Slide 64: 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 6.0% 39,600 1,116,057 367 Cartón de Colombia 2.1% 5,300 12,237 4 Total 1,128,294 371 * Argos holds a stake of the common shares. 1% 99% Grupo Sura C
Slide 65: Cementos Argos S.A Corporate presentation
Cementos Argos S.A Corporate presentation 2017