Business context and reporting period
Loma Negra Compañía Industrial Argentina S.A. filed an annual Form 20-F for the fiscal year ended December 31, 2020—not a standalone 2020 fourth-quarter report. The filing does not provide a clear set of Q4-only financial results. The company is Argentina’s leading cement producer, with concrete, aggregates, lime, railway freight and waste-recycling businesses.
Financial statements are audited and prepared under IFRS in Argentine pesos. Because Argentina is hyperinflationary, reported figures are restated into December 31, 2020 purchasing-power pesos; reported inflation for 2020 was 36.1%. Unless noted, amounts below are Ps. billions, restated for comparability.
Financial and operating performance
| Metric | 2020 | 2019 | Change / context |
|---|---|---|---|
| Revenue | 41.62 | 47.75 | Down 12.8% |
| Gross profit / margin | 12.60 / 30.3% | 13.05 / 27.3% | Profit down 3.4%; margin expanded 3.0 percentage points |
| Profit from continuing operations | 6.25 | 4.49 | Up 39.4% |
| Net profit, including discontinued operations | 11.38 | 5.51 | Up 106.8%; 2020 includes the Paraguay disposal and discontinued-operation results |
| Operating cash flow, continuing operations | 11.39 | 9.33 | Up from prior year |
| Capital expenditure on property, plant and equipment | 9.64 | 15.95 | Primarily the L’Amalí expansion |
| Borrowings / net debt | 6.44 / 2.07 | 12.54 / 10.76 | Net debt substantially lower |
| Cash and cash equivalents | 4.38 | 1.78 | Includes short-term investments |
| Working capital | (1.21) | Not clearly stated here | Management describes negative working capital as manageable, not an insolvency condition |
Net profit margin was 27.3%, versus 11.5% in 2019. The improvement in total net profit should be viewed alongside the Paraguay sale: continuing-operations profit was Ps.6.25 billion, while net profit from discontinued operations was Ps.5.13 billion. No EBITDA figure is clearly provided in the supplied filing text.
Sales volumes fell across major businesses: cement, masonry cement and lime by 5.6%; concrete by 62.5%; aggregates by 47.8%; and rail services by 15.2%. Lower sales and reduced unit energy costs helped cut cost of sales 16.4%, supporting gross-margin expansion. The company reported a Ps.0.95 billion impairment charge on property, plant and equipment, principally in rail services and aggregates.
Cash flows from continuing activities were Ps.11.39 billion from operations, Ps.1.43 billion used in investing and Ps.10.50 billion used in financing. Investing outflows were lower than the prior year partly because proceeds from the Yguazú Cementos sale offset capital spending. Financing included Ps.17.48 billion of borrowing repayments, Ps.12.69 billion of new borrowing and a Ps.2.66 billion dividend payment. These figures exclude discontinued-operation cash flows.
At year-end, 99.5% of borrowings were foreign-currency denominated and approximately 82% carried floating rates; the average debt maturity was 0.8 years. Management disclosed that a 25% peso depreciation against the U.S. dollar would increase foreign-currency debt by approximately Ps.1.7 billion. The filing reports a current ratio of 0.92, compared with 0.58 in 2019.
Material changes versus prior comparable period
- Revenue and shipment volumes declined amid COVID-19 restrictions and recessionary conditions, particularly in concrete, aggregates and rail.
- Gross margin rose despite lower revenue, reflecting reduced costs—including thermal energy, electricity, labor, contractors and maintenance—and a modest cement, masonry cement and lime price increase.
- Financial results shifted from a Ps.2.07 billion loss in 2019 to a Ps.1.07 billion gain in 2020, substantially due to improved exchange-rate results; financial expenses also declined.
- Borrowings fell from Ps.12.54 billion to Ps.6.44 billion, and net debt from Ps.10.76 billion to Ps.2.07 billion, following debt repayments funded in part by the Paraguay sale.
- The company sold its 51% interest in Yguazú Cementos in August 2020 for US$107 million. The sale generated a reported Ps.5.77 billion pre-tax disposal gain in discontinued operations; proceeds were used primarily to repay debt and pay an extraordinary dividend.
Outlook, management commentary, risks and unusual items
- Outlook: The company did not provide a clear quantified 2021 financial forecast in the supplied text and said COVID-19 effects remained uncertain. It expected clinker production at the second L’Amalí line to begin in the second quarter of 2021, with full commissioning in the second half. The project was reported 96% complete at December 31, 2020, with approximately Ps.22.49 billion invested.
- COVID-19: Plants were temporarily shut in March 2020 and operations resumed in April under safety protocols. Management pursued cost reductions, working-capital measures and reprioritization of maintenance capital spending. It cited risks to demand, receivables, assets, operations and liquidity.
- Argentina exposure: Key risks include recession, high inflation, peso depreciation, exchange controls and limits on transfers abroad, fiscal and sovereign-debt uncertainty, government price measures, and labor-cost pressures. The peso depreciated 40.5% against the U.S. dollar in 2020; CPI inflation was 36.1%.
- Debt and liquidity: Most debt is foreign-currency denominated, a substantial share is floating-rate, and maturities are concentrated in the near term. Management said available cash, operating cash flows and borrowing access should meet foreseeable needs, but acknowledged uncertainty and negative working capital.
- Other unusual matters: A year-end quarry labor dispute temporarily halted work and kiln operations at L’Amalí; the dispute was settled and deliveries continued. The company recorded the Ps.0.95 billion impairment described above. The 2020 reported financial result also included a Ps.3.18 billion profit from transactions in securities related to the Paraguay-sale proceeds.
- Contingencies and governance: At December 31, 2020, claims totaled Ps.965.5 million; Ps.197.3 million was provided for probable claims, while Ps.551.3 million of possible claims was not provided. The State Class Action in New York remained ongoing; a separate federal class action was dismissed finally in the company’s favor. Management reported effective disclosure controls and internal control over financial reporting. The auditor issued an unqualified IFRS opinion; it did not provide an attestation opinion on internal controls.
- Other forward-looking risks: Ferrosur Roca’s concession expires in 2023; a requested extension of up to ten years had not been granted as of the report date. Railway regulation, including potential open access, could affect the business.
Most important facts for investors to verify
- Separate recurring continuing-operations earnings from the Paraguay disposal gain and other discontinued-operation results when assessing 2020 profitability.
- Review debt maturities, refinancing progress, floating-rate exposure and access to foreign currency, including the impact of Argentine exchange controls.
- Track recovery in cement and concrete volumes, collection of overdue receivables, and the effect of price controls and inflation on margins.
- Confirm completion, commissioning, total cost and expected utilization of the L’Amalí expansion.
- Monitor negative working capital, cash availability, planned capital spending and the sustainability of debt reduction and dividends.
- Follow the Ferrosur concession-extension process, the New York State Class Action and the possible legal contingencies disclosed in the filing.