Loma Negra pania Industrial Argentina Sociedad Anonima(LOMA) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved an adjusted EBITDA of $48 million, representing a 9.4% increase compared to the same quarter last year [10] - Consolidated revenues dropped by 4.5%, while revenues from the core cement business increased by 5.3% with sales volumes up by 2.9% year-on-year [19] - Net income reached Ps.6.4 billion or $113 million, including Ps.4.2 billion from discontinued operations in Paraguay, compared to a loss of Ps.180 million in the previous year [25][27] Business Line Data and Key Metrics Changes - The Bag segment was a significant driver of growth, increasing around 53% compared to the same quarter last year [19] - Revenues from the railroad segment decreased by 29.8% year-on-year, with a volume drop of 5.8% [20] - Concrete and Aggregates revenues were severely impacted, with declines of 70.2% and 25.2% respectively due to halted public and private projects [20] Market Data and Key Metrics Changes - The construction sector showed signs of recovery, with a 10.5% year-on-year growth in September, marking the first positive growth after 14 months of decline [14] - The share of cement sold increased by 14 percentage points from 58% in Q1 2019 to over 72% in Q3 2020 [17] - The overall economic outlook remains challenging, with expectations of a double-digit decline in GDP for 2020 [18] Company Strategy and Development Direction - The company is focused on the L'Amalà expansion project, expected to be integrated by early 2021, as part of its long-term strategy [12][35] - Following the sale of its Paraguayan operations, the company aims to concentrate efforts in Argentina and optimize value for shareholders [35] - The management is reviewing a five-year strategic plan, considering potential growth opportunities both domestically and abroad [50] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the recovery of cement demand and expects improvements to continue, particularly as infrastructure projects resume [33] - The company acknowledged ongoing macroeconomic challenges in Argentina, particularly related to the COVID-19 pandemic and its impact on various economic sectors [34] - The management highlighted the importance of government stimulus plans focused on housing and infrastructure, which could positively influence future demand [57] Other Important Information - The company executed a sale of its Paraguayan operation, generating significant value and enabling debt repayment and an extraordinary dividend distribution of approximately $31 million [28] - The total cash position at the end of the quarter was Ps.4.7 billion, with manageable short-term debt maturities of Ps.3.9 billion [30] Q&A Session Summary Question: Utilization rates across different regions and pricing power outlook - The current utilization rate is approximately 90%, with expectations for a slight decrease in Bag cement and a recovery in bulk cement [40][41] Question: Medium-term outlook for margins with the L'Amalà expansion - Margin improvements are expected with the L'Amalà expansion, but significant improvements may not be seen until the plant ramps up production [48] Question: Government stimulus program details - Government plans focus on housing adequacy and infrastructure, with a better outlook anticipated following the approval of the 2021 budget [57]