Q4 2022 Loma Negra Compania Industrial Argentina SA Earnings Call
Speaker 1: of
Speaker 2: Good morning, and welcome to the Loma Negra 4th Quarter 2022 Conference Call and Webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker 2: After today's presentation, there will be
Speaker 2: Also, Mr. Sergio Feifman will be responding in Spanish immediately following an English translation.
Speaker 2: To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2.
Speaker 2: Please note that this event is being recorded.
Speaker 2: I would now like to turn the conference over to Mr. Diego Jallon, Head of IR. Please Diego, go ahead.
Speaker 3: Thank you. Good morning and welcome to Lebanegra's earnings conference call. By now everyone should have access to our earnings press release and the presentation for today's call, both of which were distributed yesterday after March at close. Joining me on the call this morning will be Sergio Feichmann, our CEO and Vice President of the United States of
Speaker 3: to the forward-looking statement section of our earnings release and recent filing with the SEC. We resume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. This conference call will also include discussion on...
Speaker 3: today. As always, I would like to begin my presentation with a discussion of the highlights of the quarter and then Marcos will take you through our market review and financial results.
Speaker 3: After that, I will provide some final remarks, and then we will open the cultural questions.
Speaker 4: Starting with slide 2, we are satisfied to share another solid quarter that leads to closing a year gap and in challenging macroeconomic environments.
Speaker 4: found the industry setting a new record in boiling time on the back of the dynamics showered by the construction sector.
Speaker 4: In this context, our results show that Loma was up to the challenge not only with the volumes growing more than the industry sitting a record in shipping, but also reaching an all-time high fever rate in terms of LDI generation.
Speaker 4: These results will have not been possible without the strong commitment to invest in greater capacity and efficiency that the company has carried out in recent years.
Speaker 4: As you could see from our release yesterday, our assessment EVDI for the quarter reached 91 million dollars, compared with 63 million in the fourth quarter of 2021.
Speaker 4: For Michelin pesos, it shows an increase of 5.4% compared with four quarters of 2021 assessment by inflation.
Speaker 4: Please note that the result of the quarter was boosted by the sale of non-strategic property for $19 million.
Speaker 4: When looking for our annual fill rise, we reached $289 million for the fiscal year 2022 from $215 million in 2021, achieving a new record for our company. We are focused to continue delivering strong results.
Speaker 4: and maintain a world-class AVDI margin.
Speaker 4: despite the turbulence that we face this year in terms of energy inputs and high inflation scenario.
Speaker 4: In the sense, the US dollar, EBITDA per ton, reached $39 in the fourth quarter.
Speaker 4: screwing the provency side
Speaker 4: 2.4% above 2021's fourth quarter.
Speaker 4: In this fiscal year, with the major expansion in capacity concluded, we focus our capital allocation of maximizing volume to our stakeholder.
Speaker 4: Bases on this, in 2022 we distribute dividends for $1.6 million and complete share buybacks for $10 million.
Speaker 4: Always maintaining a strong balance sheet with low in-depth schedule.
Speaker 4: Please, come to slide four for a review of our EHE highlight for the year.
Speaker 4: We have a clear purpose.
Speaker 4: that sets our course. We transform life by forcing sustainability growth. That is why we are very pleased to present the second edition of Loma Negra's sustainability reports.
Speaker 4: maintaining our commitment to inform and share with our stakeholders the impact of the company along with our goals and expectations.
Speaker 4: Regarding the environmental aspect, our direct greenhouse gas emission intensity stood at 503 kg CO2 per ton of cement.
Speaker 4: improving 2.3% year-on-year.
Speaker 4: The incidence of the second line of lanolin in our operational efficiency lead to better electrical and thermal intensity, both improving 3% year on year.
Speaker 4: thermal energy intensity was also favored due to an increased participation of natural gas in our energy matrix.
Speaker 4: The clinker factor stood at 69%.
Speaker 4: Click the above 2021.
Speaker 4: Our mission and the methodology used to calculate them were revised by third parties.
Speaker 4: and we are coming to be in the right track to achieve the goal of 470 kg of CO2 per tonne by 2013.
Speaker 4: On the social side, I would like to highlight three of the more relevant projects that will carry on in 2022.
Speaker 4: Understand that the construction industry needs to improve in terms of gender equality.
Speaker 4: For the first time, we incorporate human as mixed-tracks operators. In the same sense, 40% of our new employees are human, increasing 50% the participation of human in the payroll compared to December 2021.
Speaker 4: Regarding the government's aspect, we moved forward on training our people on the company's integrity programs.
Speaker 4: We are recovering 100% of our employees, forcing the commitment to ethics and transparency. Additionally, we felt the fourth edition of the compliance week.
Speaker 4: where we discuss about the importance of following the good practice and an ethical approach on decision making. Um
Speaker 4: We also held the program Impulsar Loma.
Speaker 4: where we invited 43 companies within customer and supplier to an awareness based on ECC methods.
Speaker 4: We know that in addition to knowing and managing, we must communicate in transparent and clear about the impacts of our operation.
Speaker 4: For that, I invite you all to read Lomax Sustainability Report, as shown us in the challenge of improving everyday of being a more sustainable company.
Speaker 4: I will now hand off the call to Marco Hradim, who will walk you through our market review at Financial Resides.
Speaker 3: Please Mars, go ahead. Thank you, surgiy. Good morning everyone. Please turn to Slide six as you can see on Slide 6, the GDP forecast for thousand and 22 is expected to be about 5% adjusted upwards from the listed micro expectation reports from the central bank as a preliminary figures for the fourd quarters. Do that for.
Speaker 3: industry sales despite the retraction shown in the last quarter, the solid demand pushed 2022 accumulated figures to record highs, growing 7% and almost reaching the 13 million tons mark, while the first month of July , 2023, shows again a strong figure. While back cement remains strong, back cement is the disease.
Speaker 3: by dispatch mode, bulk sequence continues positive trend, showing a participation of 44% against 40% in the fourth quarter of 2021. Closing the year with a participation of 42%, showing 3% hit points.
Speaker 3: more volatility to an already turbulent scenario. Turning to slide 7 for a review of our top-line performance by segment. Top-line was down 2% in the fourth quarter mainly due to the decrease in cement and railroad revenues partially compensated by the positive performance of concrete and aggregate.
Speaker 3: 17.5% in line with the strong momentum of bulk cement coupled with good pricing performance. In the same way, aggregates show a great revenues expansion of 44.5%. Volumes increase 30% primarily on the back of concrete demand coupled with strong price performance. Finally, the
Speaker 3: due to its negative impact on the average transported distance. For the fiscal year 2022, consolidated revenues were up 1.1% to 145.1 billion pesos from 143.5 million in 2021, while volumes expanded significantly across the entire world.
Speaker 3: high-grade costs related to higher thermal energy inputs made it due to the stimulus plan to increase natural gas production, an increase in maintaining costs and a higher inflation scenario that was partially compensated with a decrease in electrical energy inputs. The contraction in cement and concrete gross margin was slightly upset by the better performance of aggregate and a slightly improving railroad.
Speaker 3: Please turn to slide 10. I will adjust the BTA for the quarter
Speaker 3: stood at $91 million, up 42.7% from $63 million in the same quarter a year ago, where the operational performance was boosted by the sale of a non-strategic property. In pesos adjusted the BTA was up 5.5%, in the quarter reaching $13.2 billion.
Speaker 3: a margin of 26.7%, made affected by cement margin contraction and the higher participation in the top line of the other segments with lower margins. The cement adjusted MBTA margin reached 39.1%, expanded 170 basis points.
Speaker 3: PTA reached $39.1 per tonne net of the Extraordinary Propeter Shell increasing 2.4% from Q4 2021. Concrete adjusted PTA decreased 67 million pesos compared to Q4 2021, mainly explained by extraordinary results in other games.
Speaker 3: GBTA improved 278 million pesos this quarter from negative 9 million pesos in fourth quarter 21, reaching a margin of 25.9% and showing a great recovery for the segment, while the good momentum of the sector is being accompanied by a great operational performance.
Speaker 3: for the year
Speaker 3: 2022 adjusted VDA reached a standing figure of $289 million, setting a new record half of the company and widely surpassing the previous record accomplished in 2021. We've gone to the bottom line.
Speaker 3: On slide 12, this quarter we posted a net profit attributable to owners of the company of 7.5 billion pesos compared with 5.7 billion pesos on fourth quarter 21, where the operational result was posted by the sale of this non-suggestive property coupled with positive financial results and less income tax effect.
Speaker 3: exchange rate difference effect. For the full year, net profit attributable to owners of the company reached 2.1 billion pesos, decreasing from 12.8 billion pesos in 2021. Maybe due to the impact in the financial results generated with the cancellation of the financial crisis
Speaker 3: depth at 20.8 billion pesos consequently our net depth to EBITA ratios to that 0.37 times compared to minus 0.12 times at the end of 2021 and also showing a sequential decline from 0.54 times at the end of the third quarter 2022.
Speaker 3: in US$40 million standing our net debt at US$90 million at the end of the quarter. Breaking it out by currency, the dollar-limited debt represents 52% of the total debt while the rest is in pesos. As we mentioned before, during 2022, the dollar-limited debt represents $2.5 million.
Speaker 3: billion in the quarter and 1.9 billion for the whole year 2022. Now for our final remarks, I would like to hand the call back to Sergio. Thank you, Marcos. Now to finalize the presentation, I please ask you to turn to slide 15.
Speaker 4: 2022 was a year of many challenges and opportunities.
Speaker 4: At the company level, we achieve historic economic and operational results.
Speaker 4: and with the force and commitment of our collaborators, we continue to considerate our position as leader in Argentine cement markets.
Speaker 4: Looking ahead, the expect growth to continue in 2023 with a more moderate pace considering the high level of activity of the sector that we saw in 2022.
Speaker 4: Always subject to the outcome of local political and macroeconomic challenges.
Speaker 4: that usually are sent to in election years. In this context, we remain focused on delivering strong results and with our increased capacity, we are in an excellent position to capture future growth.
Speaker 4: Also, we are very pleased to present the second edition of our sustainability reports, maintaining our commitment to inform and share the impact of our recognition management on people, development, and the economy.
Speaker 4: We know that we must constantly and clearly communicate our operations and its path. So again, I would like to invite you all to read these reports and join us in the journey of building a sustainable future.
Speaker 4: I would like to conclude by sharing our satisfaction with the results obtained in 2022. I thank all our people and stakeholders for their commitment and support.
Speaker 4: This is the end of our prepared remarks. We are now ready to take a question.
Speaker 2: Operator, please open the call for questions. Thank you. We will now conduct a question and answer session.
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Speaker 2: If you have additional questions, you may recue for those questions and they will be addressed.
Speaker 2: Also, please note that Mr. Sergio Feifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster. Our first question is from Alexandra Obregon with Morgan Stanley .
Speaker 5: Please go ahead. Hi, good morning Sergio, Marco, Diego. Thank you for the call today. I have a question on the specific asset that was sold at Hola Barria, whether you could elaborate on what was the asset, and if there could be any more non-CUR sale assets sales of this kind in the future that could be worth considering.
Speaker 4: Would not deal with any apartin ex ces. They must tryri F? Ard your washel.
Speaker 6: The property that we sold was linked to our former facility in Ciara Espachas.
Speaker 6: It's a facility that we are not going to plan to use it in further exploitation of our other properties.
Speaker 6: to the54 Rosenberg, a archaeologist from the company that built it, in Woy Met.
Speaker 6: The company has some other properties along the country.
Speaker 6: Some of those have potential results to be used in the future. We are always analysing if the context changes, if those properties could be at value.
Speaker 6: and some other ways for the company.
Speaker 5: Thank you, that was clear. And maybe a follow-up here, what does this sale and proceeds mean from a cash management perspective? Should we perhaps rethink the dividends and buybacks for the year or even your M&A strategy ahead as cash position grows for 2023? Thank you, and if you don't mind me talking about it, ah, we'll get on to the growth in
Speaker 6: And then we will continue to look at the maximization of value for the actionists. As always, as we mentioned before, we keep looking for maximizing value for our shareholders. And we are continually analyzing new programs.
Speaker 6: reconstruction and structuralALS.
Speaker 6: And we are always analyzing shared buybacks programs and further living spaces. We don't have any other project that demands our cash flow.
Speaker 5: That was very clear and I have a second question if I still may. So I'm very curious about the outperformance of the concrete and the aggregates division. So I was wondering if you could provide some color and what are you seeing on the ground with regards to permitting of infrastructure and non-resi construction ahead and whether this could be something that could continue to contribute more than you were expecting for 2023. Thank you.
Speaker 6: By the end of last year, concrete and nitroates were improving its performance.
Speaker 6: We have seen an increase in bulk cement demand. And that along with...
Speaker 6: with an increase in infrastructure projects that give those businesses a boost.
Speaker 6: This is ause of the United States, of large trade agreements for seperation of China, and we continue trends and I hope to see you soon.
Speaker 6: With the last crisis that we came through, many small aggregate producers
Speaker 6: where they decrease their production and we kept on investing in those businesses so we are taking advantage of them now. In both businesses we expect at 2023 also better than what we saw in 20...
Speaker 7: Hi, good morning. Congratulations on the results. I have a question regarding the dynamic between price and volumes for the year. I mean, given the high volatility of this election year, do you believe that Loma can replicate or exceed last year's volumes? And then if you've seen a pickup in demand from the public sector already, do you believe
Speaker 7: And with regards to pricing, how are you adjusting your strategy to address the current high inflation environment? Thank you. We'll be right back.
Speaker 6: good morning, excess forecastmeillian bedroom Knicks demand is Tube and without volumes we expect ten eight dollar cold
Speaker 6: a level similar to what we saw in 2022 with some slight or moderate loss.
Speaker 6: Considering what happens in election years, we could expect some demand from the public sector, principally at municipal or provincial level.
Speaker 6: We have many works in the pipeline, basically in the box.
Speaker 6: in dispatch mode. Regarding our price strategy, we are following the same trend that we have been following in the past quarters.
Speaker 6: last month the price was in line with the dynamics of inflation.
Speaker 8: That was really helpful. Thank you.
Speaker 8: That was really helpful. Thank you. You're welcome.
Speaker 2: Again, if you have a question, please press star then 1.
Speaker 2: Please stand by as we poll for questions.
Speaker 2: Showing no further questions, this concludes our question and answer session. I would like to turn the conference back over to Diego Jallon for any closing remarks.
Speaker 6: Thank you all for joining us today. We really appreciate your interest in our company. We hope to meet you again in our next earnings call. In the meantime, we remain available for any questions that you may have.
Speaker 2: Have a nice day. Bye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker 1: And that question.
Speaker 1: A are.