LOMA

Business Context and Reporting Period

Company: Loma Negra Compañía Industrial Argentina Sociedad Anónima (Loma Negra)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Accounting Standards: IFRS (restated for hyperinflation under IAS 29)
Business Overview: Argentina's leading vertically integrated cement and concrete producer, with nationwide operations including cement, masonry cement, lime, aggregates, concrete, and railway freight services (Ferrosur Roca). The company operates seven cement plants and holds significant limestone reserves.

Key Financial Metrics (2025 vs. 2024)

Note: All figures are in Argentine Pesos (Ps.) restated to constant currency as of December 31, 2025, in accordance with IAS 29 due to Argentina's hyperinflationary economy (31.5% inflation in 2025).

Material Changes vs. Prior Period

• Profitability Collapse: Net profit plummeted 88.7% to Ps. 22.8 billion. This was primarily driven by a Ps. 255.8 billion decrease in the "Gain on net monetary position" (a non-cash accounting gain resulting from holding monetary liabilities in a hyperinflationary environment) and a Ps. 27.6 billion increase in exchange losses due to peso devaluation (41.3% in 2025).
• Revenue Decline: Revenue decreased 7.8% despite a 2.5% increase in cement sales volume. The decline was caused by an 11.9% drop in average sales prices for cement, reflecting softer pricing conditions and a lagging recovery in retail (bagged) cement demand.
• Segment Performance:
  • Cement: Revenue down Ps. 79.2 billion due to price erosion.
  • Concrete: Revenue up Ps. 6.2 billion, driven by a 42.7% volume increase, offsetting a 24% price drop.
  • Railroad: Revenue down Ps. 7.6 billion; volume increased 8.2% but prices fell 15.8%.
• Cost Structure: Cost of sales decreased 1.6% to Ps. 663.1 billion, aided by lower energy costs (thermal and electrical) and reduced maintenance expenses, partially offset by higher depreciation and freight costs.

Guidance, Outlook, and Risks

• Macroeconomic Environment: Argentina's GDP grew 4.4% in 2025, with inflation decelerating to 31.5%. The government achieved a fiscal surplus of 0.2% of GDP. However, the peso depreciated 41.3% against the USD, and the exchange rate regime shifted to a flexible band system in April 2025.
• Ownership Uncertainty: The indirect controlling shareholder, InterCement Participações S.A., completed a judicial reorganization in Brazil in late 2025. A new ownership structure was established with no single controlling shareholder. A "marketing process" to sell Loma Negra's equity interest may be initiated by September 30, 2028, creating potential for a change of control.
• Railway Concession Risk: The Ferrosur Roca railway concession was extended provisionally until September 10, 2026. The government is designing a new "open access" framework. Early termination or unfavorable new terms could materially impact the railroad segment.
• Energy and Input Costs: Energy remains a significant cost driver (19% of cost of sales). The company is increasing the use of co-processing (waste as fuel) and renewable energy (57% of electrical power in 2025) to mitigate volatility.
• Legal Proceedings: A US class action lawsuit regarding the 2017 IPO was settled in March 2025 for US$ 24.6 million (covered by insurance), with no admission of liability. Antitrust investigations by the Argentine CNDC regarding cement pricing were closed in late 2024 with no findings of anticompetitive practices.

Investor Verification Checklist

• Hyperinflation Accounting: Verify the impact of IAS 29 restatement on reported profits, specifically the volatility of the "Gain on net monetary position" which significantly inflated 2024 results and contracted 2025 results.
• Exchange Rate Exposure: Assess the sensitivity of net debt (85% denominated in USD) to further peso devaluation, given the shift to a flexible exchange rate band.
• Control Change: Monitor the status of the "Loma Negra Sale Procedure" initiated by the reorganized indirect controlling shareholder, which could lead to a change in strategic direction.
• Railway Concession Status: Track negotiations regarding the Ferrosur Roca concession renewal beyond September 2026 and the implementation of the "open access" railway model.
• Dividend Policy: Review the allocation of net profit to the "Optional Reserve for Future Dividends" (Ps. 23.6 billion allocated in 2025) and the regulatory restrictions on repatriating dividends to non-resident shareholders.