Loma Negra pania Industrial Argentina Sociedad Anonima(LOMA) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company's top-line revenue for Q2 2024 was Ps. 166.1 billion, a decrease of 28% year-on-year, with cement volume down 32.5% [5] - Consolidated adjusted EBITDA reached $51 million (Ps. 38 billion), down 11.7% year-on-year, but the EBITDA margin expanded to 28.1%, an increase of 520 basis points [5][13] - Net profit attributable to owners of the company was Ps. 29.6 billion, compared to Ps. 9.5 billion in Q2 2023, driven by operational performance and financial gains [15] Business Line Data and Key Metrics Changes - The Cement, masonry & lime segment saw a revenue decline of 26.1%, with volumes contracting 32.5% year-on-year, although strong pricing partially offset the decline [9] - Concrete revenues decreased by 47% due to a 45% drop in dispatches, while the aggregate segment revenues fell by 36% with state volumes down 25% [10] - Railroad revenues decreased by 14.5%, with transported volumes down 22.5%, but positive price dynamics helped mitigate the impact [10] Market Data and Key Metrics Changes - The construction activity indicator showed gradual improvement after a low in March, with cement dispatches reflecting a positive trend in July [7][8] - Bulk cement dispatches were down 41% year-on-year, while bagged cement saw a 24% increase, indicating a shift in demand [8] Company Strategy and Development Direction - The company is focusing on profitability and cost control initiatives, which have led to EBITDA margin expansion despite volume declines [4] - Management expressed optimism about the construction industry's recovery, citing stabilization of economic factors and increased foreign direct investment as key drivers [18] Management's Comments on Operating Environment and Future Outlook - Management noted a gradual recovery in cement volumes and expects this trend to continue, supported by improved economic conditions and increased credit availability [21] - The company anticipates maintaining current price levels while managing costs effectively, with expectations for margin stability in the upcoming quarters [22] Other Important Information - The company ended the quarter with a net debt of Ps. 119 billion, with a net debt to EBITDA ratio of 1.26 times, indicating a strong balance sheet [16] - Capital expenditures for maintaining operations and kiln projects were allocated at Ps. 16.3 billion, with a focus on addressing short-term debt maturities [17] Q&A Session Summary Question: July volumes and price trends - Management indicated that July showed a significant recovery in volumes and expects this trend to continue, driven by improved economic conditions and real wage recovery [21] Question: Sustainability of margin increases - Management believes that margins can be maintained despite potential impacts from thermal energy costs, with expectations for further improvements in Q4 [22] Question: Main drivers of recovery in the second half of the year - Management identified private works and the potential approval of the Rige program as key drivers for recovery, with expectations for increased activity in the mining sector [24] Question: Capital allocation and dividends - Management stated that they are evaluating capital allocation options, including addressing short-term debt with cash generation and bank lines, while maintaining a focus on shareholder value [26] Question: Volume mix of bag versus bulk cement - Management reported a current mix of 60% bag and 40% bulk cement, with expectations for bulk to contribute more in the future without impacting pricing [30][31]