Loma Negra Compania Industrial Argentina Sociedad Anonima - 1Q21 Financial Summary
Business Context and Reporting Period
This Form 6-K reports the unaudited financial results for Loma Negra, the leading cement producer in Argentina, for the three-month period ended March 31, 2021 (1Q21). The filing was submitted on May 12, 2021. The company operates in cement, masonry, lime, concrete, aggregates, and railroad logistics. Financial figures are presented in Argentine Pesos (Ps.) and U.S. Dollars (US$), with some tables excluding the impact of IAS 29 (hyperinflation accounting) for comparability.
Key Financial Metrics
| Metric | 1Q21 (Ps. Millions) | 1Q20 (Ps. Millions) | YoY Change |
|---|---|---|---|
| Net Revenue | 13,175 | 9,734 | +35.4% |
| Gross Profit | 4,776 | 2,966 | +61.0% |
| Adjusted EBITDA | 4,706 | 3,145 | +49.6% |
| Net Profit | 2,568 | 1,256 | +104.4% |
| Net Debt | 640 | 18,294 | -96.5% |
| Net Debt / LTM Adj. EBITDA | 0.04x | 1.31x | -1.27x |
| Cash from Operations | 2,929 | 160 | Significant Increase |
USD Figures (Excluding IAS 29): Net Revenue was US$143 million (+32.5% YoY), Adjusted EBITDA was US$52 million (+45.6% YoY), and Net Profit was US$37 million (+250.5% YoY).
Material Changes vs. Prior Period
- Revenue Growth: Driven primarily by the core cement segment, which saw a 38.0% volume increase to 1.38 million tons, stabilizing near pre-pandemic levels. Concrete and Aggregates volumes also grew significantly (104.6% and 42.5% respectively), though absolute levels remain below pre-pandemic norms.
- Margin Expansion: Gross Profit margin expanded 577 basis points to 36.2%, and Adjusted EBITDA margin expanded 341 basis points to 35.7%. This was achieved through operational leverage and cost control, particularly in energy costs measured in USD.
- Debt Reduction: Net Debt plummeted by 96.5% to Ps. 640 million. Total debt decreased to Ps. 6,688 million, while cash and equivalents rose to Ps. 6,048 million. The Net Debt to LTM Adjusted EBITDA ratio improved to 0.04x.
- Financial Gains: A significant "Gain on net monetary position" of Ps. 558 million contributed to the bottom line, reflecting the real appreciation of the Peso and lower foreign currency-denominated debt.
Guidance, Outlook, and Management Commentary
Management Commentary: CEO Sergio Faifman highlighted a "solid operating cashflow generation" and "world-class profitability levels." Cement demand has stabilized around pre-pandemic levels, while other segments continue a slower recovery.
Outlook: Management expects "moderate growth" for the remainder of 2021. However, they noted uncertainty due to the macroeconomic context and the potential impact of a second wave of COVID-19 on large construction projects.
Capital Expenditures: The L'Amalí plant expansion is 98% complete, with full commissioning expected in Q2 2021. This project will add 2.7 million tons of annual capacity. Total CapEx for 1Q21 was Ps. 1,022 million.
Share Repurchase: The company is executing a share repurchase plan approved in February 2021. As of May 11, 2021, Ps. 476 million (63.5% of the Ps. 750 million limit) had been utilized.
Risks: Forward-looking statements are subject to risks including changes in Argentina's economic and political conditions, inflation rates, exchange rate fluctuations, and construction demand levels.
Investor Verification Checklist
- IAS 29 Impact: Verify the distinction between reported figures (including IAS 29 inflation adjustments) and the "homogeneous cash currency" figures (excluding IAS 29) to understand the true operational performance versus accounting effects.
- Debt Composition: Confirm the currency denomination of the remaining debt (81.6% USD, 17.8% EUR) and the average duration (0.6 years) to assess refinancing risks.
- L'Amalí Commissioning: Monitor the timeline for the full start-up of the clinker line at the L'Amalí plant, scheduled for the end of May 2021, to validate capacity expansion claims.
- Segment Margins: Review the divergence in segment performance; while Cement margins are strong, Concrete and Railroad segments faced pricing pressures and margin deterioration.
- Share Repurchase Progress: Track the remaining utilization of the Ps. 750 million buyback program and its impact on earnings per share.