Regarding our balance sheet, in this quarter we showed substantial deleveraging, with a Net Debt of $177 million, $40 million less than the previous quarter. While we recognize the challenges ahead, we are optimistic about the short-term future of our company and we are excited about the opportunities that lie ahead,” he concluded.
This month a key deadline for the future of Loma Negra expires
The operation and results of Loma Negra are being watched closely of several economic groups interested in taking control of the Olavarría cement factory.
Firstly, there is Companhia Siderúrgica Nacional (CSN), which has a negotiation underway to retain the entire share package of InterCement Participações.
Last September, the parties agreed to a new exclusivity period for the benefit of CSN, which expired on October 16, 2024, but which admitted an automatic extension until Saturday, November 16as long as it was not objected by the creditors with whom Intercement is negotiating the restructuring of its debts.
However, there are other candidates who They have not yet resigned themselves to being out of the race for the purchase of Loma Negra and other InterCement assets. The company has a market position that makes it very attractive to some investors in the sector, whose list includes everything from the Argentine Marcelo Mindlin to Brazilian oil companies and European construction companies.
Loma Negra Compañía Industrial Argentina Sociedad Anónima was founded in 1926 and is the leading cement company in Argentina, with almost 50% of the market. It produces and distributes cement, masonry cement, lime, aggregates and concrete, products used mainly in private and public construction.
It also operates the Ferrosur Roca freight railway network through its participation in Cofesur, the controlling company of Ferrosur Roca SA, which recently achieved the extension of the concession for another year.
The very nature of your activity makes it very sensitive to the fluctuations of the economic contextsince cement demand tends to move in parallel to the economic activity cycle, with a high correlation with GDP.
Furthermore, it has high exposure to the construction sector, activity that has been going through a very critical period due to the drop in activity and the sharp cut in public works that was implemented by the government of Javier Milei.
The fall in cement sales volume moderates
Loma Negra’s balance sheet highlights that the third quarter sales volumes in Cement, Masonry and Lime decreased 17.1% year-on-yearreaching 1.4 million tons. But he clarifies that they registered “a significant sequential recovery of 32%”, surpassing the industry’s recovery.
Cement on the stock market is showing a more solid recovery, recording a decrease of only one digit year-on-year. Bulk cement shipments continue to lag, as larger construction projects typically require more time for planning and execution once favorable economic conditions begin to appear, the report added.
“Likewise, public works continue to show low levels of activity, while the national government and provinces explore new frameworks to redefine public investment in infrastructure”he admits.
Regarding the volume of the Concrete segment, it showed a decrease of 22.2% year-on-year. Segment volumes followed the trend of bulk cement shipments, showing a slower recovery, although the sequential comparison showed a solid 28% improvement.
“The incidence of the public sector remains very low, while the national government and provincial authorities are discussing the next steps to follow”he indicates.
Similarly, Aggregates segment volumes decreased by 28.7% year-on-year.
The Rail segment experienced a contraction of 7.0% compared to the same quarter in 2023. The lower transported volume of construction materials was partially offset by an improvement in grain, chemicals and frac sand volumes.
With less inflation, net sales income falls
Regarding sales measured in pesos, the balance sheet admits that Loma Negra suffered a drop in income because inflation was moderating and product price adjustments are no longer as frequent as before.
Thus, it details that the income from Net Sales decreased by 21.2% to $180,686 million in the third quarter, from $229,223 million in the same quarter last year, mainly due to a lower result in sales of the Cement segment, followed by the rest of the businesses.
The Cement, masonry cement and lime segment recorded a drop of 21.0% year-on-year, with a decrease in volumes of 17.1%.
“Exchange cement shipments are showing a faster recovery, while bulk cement has been more affected by the economic environment, the paralysis of public works and lower levels of activity in larger private projects,” he explains.
And he adds: “This effect is accentuated by lower price dynamics. With monthly inflation reduced to single digits, price increases are made more spaced out over timeallowing a more stable business environment.”
The Concrete segment recorded a decrease in revenue of 29.7% compared to the third quarter of last year, mainly due to lower volumes, which fell by 22.2%, along with weaker pricing dynamics.
Similarly, the Aggregates segment showed a decrease in revenue of 42.4%, due to a drop in sales volumes of 28.7%, added to a more competitive scene which affected the price dynamics.
Revenue from the Railway segment showed a more moderate decline of 4.7% in the third quarter of this year compared to the same quarter in 2023, as the lower volume transported, which fell only 7.0% in the quarter, was partially offset by positive price dynamics.
Source: Ambito
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