Business Context and Reporting Period
Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA), the leading cement producer in Argentina, reported results for the three-month period ended June 30, 2023 (2Q23). The company operates vertically integrated segments including Cement, Concrete, Aggregates, and Railroad. The reporting period coincided with economic uncertainty in Argentina driven by upcoming presidential elections and high inflation.
Key Financial Metrics
| Metric | 2Q23 (Ps. Millions) | 2Q22 (Ps. Millions) | 2Q23 (US$ Millions) | 2Q22 (US$ Millions) |
|---|---|---|---|---|
| Net Revenue | 50,911 | 54,474 | 206 | 204 |
| Adjusted EBITDA | 11,670 | 15,797 | 63 | 63 |
| Adjusted EBITDA Margin | 22.9% | 29.0% | 30.4% | 30.8% |
| Net Profit | 2,443 | 5,203 | 25 | 56 |
| Net Debt | 47,651 | 657 | 186 | 5 |
| Net Debt / LTM Adj. EBITDA | 0.82x | 0.01x | 0.82x | 0.01x |
| Operating Cash Flow | 11,884 | 3,136 | N/A | N/A |
Note: Figures in Pesos are adjusted for inflation (IAS 29). Figures in US Dollars exclude IAS 29 impact for comparability.
Material Changes vs. Prior Period
- Revenue: Decreased 6.5% year-over-year (YoY) in adjusted pesos, driven by declines in Cement and Railroad segments. In US dollars, revenue was flat (up 1.0%) due to currency devaluation.
- Profitability: Net profit fell 53.0% YoY to Ps. 2,443 million. Adjusted EBITDA declined 26.1% YoY in pesos but remained flat in US dollars. Gross profit margin contracted 448 basis points to 23.7%.
- Debt Position: Net debt increased significantly to Ps. 47,651 million (US$ 186 million) from Ps. 657 million in 2Q22, resulting in a Net Debt/LTM Adjusted EBITDA ratio of 0.82x.
- Segment Performance:
- Cement: Volumes down 3.6%; revenue down 12.4% due to lower bagged cement demand and price timing issues.
- Concrete: Volumes up 14.8%; revenue up 26.6%, offsetting declines in other segments.
- Railroad: Volumes down 9.6% due to lower fracsand and aggregate transport.
Guidance, Outlook, and Management Commentary
CEO Sergio Faifman highlighted the resilience of the cement industry, noting solid shipment levels despite economic scaling uncertainties. Management emphasized strong value return to shareholders, with total dividends for the first half of the year reaching approximately US$ 120 million (approx. 16% yield).
Capital Actions:
- Dividends: Announced two dividend payments totaling Ps. 35,900 million (Ps. 61.53 per share) during the quarter.
- Debt Issuance: Issued Class 2 domestic bonds totaling US$ 71.7 million with a 6.5% annual interest rate and maturity in December 2025.
Risks and Contingencies: The filing notes risks related to Argentina's general economic and political conditions, inflation rates, exchange rate fluctuations, and construction demand levels. Forward-looking statements are subject to these uncertainties.
Investor Verification Checklist
- Currency Impact: Verify the distinction between IAS 29 adjusted peso figures (showing declines) and non-adjusted US dollar figures (showing stability) to understand real operational performance vs. inflationary accounting effects.
- Debt Composition: Confirm that 53% of total debt is denominated in US dollars and review the average duration of 1.3 years to assess refinancing risk.
- Dividend Sustainability: Assess the ability to maintain high dividend payouts (approx. 16% yield) given the increased net debt position and higher financial costs.
- Segment Mix: Monitor the shift in revenue mix toward lower-margin Concrete and Aggregates segments, which contributed to the overall margin contraction.