Q1 2024 Loma Negra Compañía Industrial Argentina SA Earnings Call
Operator: Thank you for standing by for the Loma Negra conference call. The conference will begin shortly. Please continue to hold, and thank you for your patience.
Thank you for standing by for the Loma Negra Conference call. The conference will begin shortly please continue to hold and thank you for your patience.
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Operator: Good morning, and welcome to the Loma Negra first quarter 2024 conference call and webcast. All participants will be in listen-only mode.
Speaker Change: Good morning, and welcome to the Loma Negra first quarter 'twenty 'twenty four conference call and webcast all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Also, Mr. Xochitl Faifman will be responding in Spanish, immediately following an English translation. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Diego Jalon, Head of HR and IR. Please, Diego, go ahead.
Speaker Change: After today's presentation there'll be an opportunity to ask questions also Mr City, all five men will be responding in Spanish immediately following an English translation to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is.
Speaker Change: Being recorded I would now like to turn the conference over to Mr. Diego alone head of HR.
Speaker Change: Our please Diego go ahead.
Diego Jalon: Thank you. Good morning, and welcome to Loma Negra'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 market close. Joining me on the call this morning will be Sergio Faifman, our CEO and Vice President of the Board of Directors, and our CFO, Marcos Gradin. Both of them will be available for the Q&A session
Diego: Thank you good morning, and welcome to illuminate US earnings conference call by now everyone should have access to ore hardness press release and the presentation for today's call both of which were distributed yesterday after market close.
Diego: Joining me on the call. This morning will be such a five month, our CEO and vice President of the board of directors and our CFO, Michael what I need.
Diego: Both of them will be available for the Q&A session.
Diego Jalon: Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filing with the SEC. We assume 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 of non-GAAP financial measures. The full reconciliation of the corresponding financial measures is included in the earnest press release. Now, I would like to turn the call over to Sergio.
Diego: Before we proceed I would like to make the following safe Harbor statements.
Diego: Today's call will contain forward looking statements.
Diego: Refer you to the forward looking statements section of our earnings release and recent filings with the S. E C.
Diego: We assume no obligation to update or revise any forward looking statements to reflect new or changed events or circumstances.
Diego: This conference call will also include a discussion on non-GAAP financial measures. The full reconciliation of the corresponding financial measures is included in the earnings press release now.
Diego: Now I would like to turn the call over to Sasha.
Sergio Faifman: Thank you, Diego. Hello, everyone, and thank you for joining us this morning. I would like to start my presentation by discussing the highlights of the quarter. Then, Marcos will take you through the market review and financial results. Following that, I will share some final remarks before opening the call to your questions. Starting with light.
Sasha: Thank you Diego Hello, everyone and thank you for so you announced this morning.
Sasha: I would like to start my presentation by discussing the highlights of the quarter.
Sasha: And then medical who would take you over market review and financial results. Following that I wish I had some final remarks before opening the call total question.
Sasha: Starting with slide two.
Sasha: When I started a year full of new challenges and it's my pleasure to present the highlights of the quarter.
Sergio Faifman: We're starting a year full of new challenges, and it is my pleasure to present the highlights of the quarter, which were marked by a significant drop in activity levels amid the follow-up of the stabilization plan carried out by the Millet administration. In a short time, the new government has achieved some hopeful accomplishments, such as reducing inflation and achieving fiscal surplus. After the sharp devaluation of last December and the correction of relative prices, the construction industry has experienced a significant drop in demand, with industry stakeholders awaiting the consolidation of the new macroeconomic scenario. In this context, Loma has focused on its main strengths, its leadership position, and its operational flexibility and efficiency to navigate through this transition period.
Sasha: Which was making it seems that the drop in activity level I mean, the photo of the stabilization plan got it out I didn't mean that.
Sasha: He had an installation.
Sasha: In a short time, the new government has achieved some hopeful.
Sasha: <unk>.
Sasha: And have you seen any inflation in achieving peace Cal two plus.
Sasha: The sharp devaluation of last December and the correction relative price the construction industry.
Sasha: It seems that the drop in demand with key industry stakeholders are waiting the consolidator of the new macroeconomic aside.
Sasha: In this context noma I focus on each mine.
Sasha: Our leadership position and the operational flexibility and you can see in seed to navigate through the kitchen vignettes.
Sergio Faifman: Our top line stood at 114.9 billion pesos, decreasing 27% in the quarter, with cement volumes down 31%. The Consolidated Assessment EBDI reached $42 million or $26 billion pesos in the first quarter of the year. The 31% decline in cement shipment tightened our ADDI margin, which reached 22.6%, contracting by 316 bps year-on-year. However, it remains stable on a sequential basis despite the significant drop in volume. In the same sense, EBDI per ton stood at $39.3 for the quarter, maintaining a similar level when compared year-on-year and on a cumulative basis.
Sasha: Our top line stood at 114 9 billion pesos decreasing 27% in the quarter with sending volumes down 31%.
Sasha: The consolidated assessment, EBITDA, reaching $42 million or 26 billion pesos in the first quarter of the year.
Sasha: The city, 1% decline in cement shipments dynamic what did he do a machine.
Sasha: 22, 6%.
Sasha: Contracting by 16.
Sasha: 15 basis points, yeah, yeah.
Sasha: Whether it's remained stable on a sequential basis, despite the significant drop in volume.
Sasha: In the same sense EBITDA per tonne is stood at 39, three <unk> for the quarter maintained at similar level when compared year on year.
Sasha: The sequential basis.
Marcos Isabelino Gradin: On the financial side, our balance sheet remains very strong, with a net debt of $207 million and a very comfortable maturity score. I will now hand over the call to Marcos Gradin, who will walk you through our market review and financial results. Please, Marcos. Go ahead. Thank you.
Sasha: On the financial side, our balance sheet and my bet is strong with net debt.
Sasha: 207 million boiler and a very comfortable maturity schedule.
Sasha: I would know come off the call to Michael Binetti, who will walk you through our multiyear view on peanuts episodic pretty.
Michael Binetti: Pretty medical's CT.
Marcos Isabelino Gradin: Thank you, Sergio. Good morning, everyone.
Michael Binetti: Thank you Sergio and good morning, everyone. Please turn to slide four.
Marcos Isabelino Gradin: Please turn to slide four. As you can see on the lower left chart, the market expectation report from the Central Bank. This signals that the first quarter might indicate the deepest quarterly drop in construction of the economy for this year, with a better outlook for the second half. When we dive into the numbers of our industry, we can see that the construction activity indicator shows a significant drop in the first months of the year, deepening the drop in March.
Michael Binetti: As you can see on the lower left chart the market expectation report from the Central Bank.
Michael Binetti: The first quarter might indicate the deepest quarterly construction of the economy for this year.
The outlook for the second half when we dive into the numbers of our industry. We can see that the construction activity indicators shows a significant drop in the first.
Michael Binetti: And that's of the year.
Michael Binetti: The opinion that Rob in March.
Marcos Isabelino Gradin: The monthly Industry 7 sales chart shows the same trend, where the effects of the stabilization plan coupled with weather conditions also affect 7 shipments. Political transitions and the consequent effects of the tighter economic policies and the equation effects took a hit on construction activity. The Industry Spark 7 Dispatches were the most affected by this content, down 33% year-on-year, while BAC-7 posted a construction of 27%. When looking at the breakdown by dispatch mode for the quarter, bag shipments represented 41% of the total dispatches, while the bag foreman regained terrain reaching 59% to percentage points above the first quarter of 2023. We are cautiously optimistic that, in line with market expectations, we will start to see signals of recovery in the upcoming quarters.
Michael Binetti: Monthly industry seven sales charts shows the same trends, but the effect of the stabilization plan coupled with weather conditions also affected seven shipments.
Michael Binetti: The political jurisdiction and the consequent effects of the data economy policy center the equation effects.
Michael Binetti: <unk> took a hit of the construction activity.
Michael Binetti: The industry is about seven dispatch as well the most affected by this context down 43% year on year.
Michael Binetti: While that seven posters or construction of 27%.
Michael Binetti: When looking at the breakdown by dispatch more for the quarter, but shipments represents 41% of the adult of dispatch as well does that fold Mt.
Michael Binetti: Regain geron, reaching 59% two percentage points above the first quarter of 2023.
Michael Binetti: We are cautiously optimistic.
Speaker Change: That's in line with the market expectations, we will start to see signals of recovery in the upcoming quarters.
Marcos Isabelino Gradin: Turning to slide 5 for a review of our top-line performance by sector, the first quarter top line shows a decrease of 27%, mainly due to the decline in the cement segment, also followed by other business. The cement, masonry, and line segment was down 25.4%, with volumes contracting by 31.3% year-on-year, mainly due to the impact of the economic environment partially compensated by a solid price performance, although the contraction impacted both dispatch modes.
Speaker Change: Turning to slide five for a review of our top line performance by segment.
Speaker Change: First quarter topline show a decrease of 27% mainly attributed to the decline in the semi segment also followed by the other businesses.
Speaker Change: The sentiment measures sentiment a nice segment was down 25, 4%.
Speaker Change: Volumes contracting but.
Speaker Change: 31, 3% year on year, mainly due to the impact of the economic environment, partially compensated by a solid price performance.
Although the contraction impacted both dispatch modes that.
Marcos Isabelino Gradin: Marks Cement was the most affected in our segmentation of clients. Concrete producers and industries were significantly down, while public works remained held. Concrete revenues decreased by 41% in the quarter due to the 41.7% decrease in dispatch. The larger-scale projects in our operations target market are either hard-hit or experiencing a low level of activity as they seek more stable conditions with the consolidation of economic measures.
Speaker Change: Similar to what the most affected in our segmentation of clients.
Speaker Change: Crystal users and industries.
Speaker Change: <unk> significantly down but public works remained held it.
Speaker Change: Complete revenues decreased by 41 percentage of quota.
Speaker Change: Due to the 41, 7% decrease in dispatches.
Speaker Change: The largest scale projects our operations target market are either additive or experiencing a.
Speaker Change: A low level of activity as they seek more stable conditions.
Speaker Change: Consideration of economic measures.
Marcos Isabelino Gradin: Aggregate segments showed a decrease of 14.5%, with aggregate volumes down 38.7%, following the trend of the concrete sector. Finally, railroad revenues decreased by 19.5% in the quarter. Transported volumes were down by 28.1%, primarily affected by the lower level of activity in the construction sector, which impacts our main cargo shippers, especially in agriculture. Additionally, a storm that hit Vallablanca in December affected the chemical plants of the region.
Speaker Change: Aggregates segment show a decrease of 14, 4% with sales volumes down 38, 7%.
Speaker Change: Following the trend of the concrete segment.
Speaker Change: Finally railroad revenues decreased by 19, 5% in the quarter.
Speaker Change: I suppose that volumes were down by 28, 1% primarily affected by the lower level of activity in the construction sector.
Speaker Change: Which impact our main cargo shippers, especially in aggregates.
Speaker Change: Additionally, a storm that kids via Blanca December effect of the chemical plants of the redshift does.
Marcos Isabelino Gradin: The transporter of chemicals was normalized by the end of the quarter. On the other hand, we improved the transported volume of fracked sand. Moving on to slide 7, consolidated gross profit for the quarter declined 32.8%, with a margin contraction of 217 basis points to 25.3%, mainly due to the volume contraction of our corbis. Regarding the cement segment, the lower volume also impacted the cost per ton due to a low dilution of our fixed cost on a per ton basis. This effect was partially offset by lower energy inputs. We recorded improvements in both thermal and electrical energy costs.
Speaker Change: Transported of chemical was normalized by the end of the quarter.
Speaker Change: The hand, we improved it transported volume of Frac sand.
Speaker Change: Moving onto slide seven consolidated gross profit for the quarter declined 32, 8% with a margin contraction of 217 basis points to 25, 3%.
Speaker Change: Mainly due to the volume contraction on our core business.
Speaker Change: Regarding the SME segment, the lower volume also impacted the costs per ton due to a lower dilution of our fixed cost on a per ton basis.
Speaker Change: This effect was partially offset by lower energy inputs, we recorded improvements in both thermal and electrical energy cost.
Marcos Isabelino Gradin: Finally, SG&A expenses decreased by 6.7% year-on-year, mainly due to lower turnover tax and freight costs related to lower volumes, as well as a decrease in insurance and marketing expenses. As a percentage of sales, it showed a year-on-year increase of 251 BPP, reaching 11.5% due to the decrease in the top line. Please turn to slide 8.
Speaker Change: Finally, with SG&A expenses decreased by six 7% year on year.
Speaker Change: Mainly due to lower turnover tax and freight cost related to lower volumes as well as how the accretion ensures our marketing expenses.
Speaker Change: As a percentage of sales it show a unit increase of 251 basis points, reaching 11, 5% due to the decrease in adult life.
Marcos Isabelino Gradin: Our adjusted EBITDA for the quarter stood at US$42 million. In pesos, adjusted EBITDA was down 37.1%, reaching 26 billion pesos with a consolidated EBITDA margin of 22.6%. Although contracting 360 basis points year-on-year, on a sequential basis, the margin remains stable despite the sharp volume decrease. 7 checkpoints adjusted to BTA, margins stood at 26.1%, contracting 356 basis points. The positive price performance and better energy inputs mitigated the lower sales volume. On a per-ton basis, EBITDA reached $39 per ton, with a slight variation year-on-year and remaining flat on a sequential basis.
Speaker Change: Please turn to slide eight our adjusted EBITDA for the quarter stood at 42 million U S dollars.
Speaker Change: In basis, adjusted EBITDA was down 30, 741%, reaching 26 billion pesos with a consolidated EBITDA.
Speaker Change: Margin of 22, 6%.
Speaker Change: Contracting 360 basis points year on year.
Speaker Change: On a sequential basis the margin remained stable despite the sharp volume decrease.
Speaker Change: Symantec plans adjusted EBITDA margins stood at 26, 1% contracting for <unk> hundred 66 basis points the.
Speaker Change: The positive breakthrough for months and better energy inputs mitigated the lower sales volume.
Speaker Change: In a burden basis EBITDA reached $39 per ton with a slight variation year on year and remaining flat when I say fluctuation.
Marcos Isabelino Gradin: Concrete adjusted the BTA decreased 724 million pesos compared to the same quarter of last year, with a margin contraction of 883 basis points, REACHING MINUS 10% PRIMARILY due to the sharp drop in this vaccine. The adjusted EBITDA margin of aggregates contracted to minus 1.1% from 17.6% in the first quarter of 2023, mainly due to lower volumes and lower fixed cost absorption. Finally, the Adjusted EVTA Range of the Railroad Segment expanded to 0.4% in the first quarter, from negative 1.2% a year ago, primarily due to the positive price performance and a better result in other gains that compensated for the lower transported volume.
Speaker Change: Concrete adjusted EBITDA decreased 724 million pesos compared to the same quarter of last year.
Speaker Change: With a margin contraction of 883 basis points.
Speaker Change: Reaching minus 10% primarily.
Speaker Change: Due to the sharp drop of these strategies.
Speaker Change: The adjusted EBITDA margin of aggregates contracted two minus one 1% from 17, 6% in the third quarter of 2023.
Speaker Change: Mainly due to lower volumes and lower fixed cost absorption.
Speaker Change: Finally, the adjusted EBITDA margin of the radio segment expanded to 0.4% in the first quarter from negative one 2% a year ago, primarily due to the positive performance and a better result in other against compensated the lower transported volumes.
Marcos Isabelino Gradin: Moving on to the bottom line on slide 10, this quarter we posted a net profit attributable to owners of the company of 50.7 billion pesos, compared to a net profit of 20.4 billion pesos in the first quarter of 2023. The higher total net financial gain was boosted by the positive effect of inflation on the net monetary position. However, this effect was partially offset by a higher net financial expense due to a higher net debt position. In the same sense, the foreign exchange loss decreased due to a slower pace of devaluation following the sharp movement of the EFX in December.
Speaker Change: Moving onto the bottom line on slide 10, this quarter with posted a net profit attributable to owners of the company of $50 7 billion pesos.
Speaker Change: Compared to a net profit of 24 billion pesos in the first quarter of 2020 fleet.
Speaker Change: The higher total net financial gain was boosted by the positive effect of inflation on the net monetary position.
This effect was partially offset by a higher net financial expenses due to a higher net debt position.
Speaker Change: In the same sense, the foreign exchange loss decreased due to a slower pace of devaluation. Following the sub movement of D effects in December.
Marcos Isabelino Gradin: Moving on to the balance sheet, as you can see on slide 11, we entered the quarter with a cash position of 5.8 billion pesos and a total debt of 183.1 billion pesos. Consequently, our net debt-to-EBITDA ratio stood at 1.3 times, compared to 1.4 times at the end of 2024. Our operating activities used cash stood at 7.7 billion pesos, where the decrease in the net profit adjusted to reconcile to net cash provided by operational activities was coupled with higher working capital needs, mainly due to the increase in print care inventories that we will use during the upcoming week. During winter, we will minimize our production to avoid higher energy inputs while using the kilns shut down to perform our maintenance.
Speaker Change: Moving onto the balance sheet as you can see on slide 11, we ended the quarter with a cash position of $5 8 billion pesos, a total debt at $183 1 billion pesos.
Speaker Change: Consequently, our net debt to EBITDA ratio stood at one three times compared to one four times at the end of 2000 and traditionally.
Speaker Change: Our operating activities used Gus stood at $7 7 billion pesos.
But the decrease in the net profit adjusted to reconciled to net cash provided by operating activities less capital, we've idled working capital needs, mainly due to an increase in BRCA inventories.
Speaker Change: We will use to in depth come into it.
Speaker Change: During winter, we will minimize our production to avoid kind of energy inputs, but are you seeing that kills shut down to put full myeloma dania.
Marcos Isabelino Gradin: Regarding capital expenditures, we allocated 8.5 billion pesos, mostly for maintaining capital expenditures. As a result of the slowdown in demand, we are working on adjusting our CAPEX and maintenance plans to the current scenario. During the quarter, the company generated cash in financial activities for 16 billion pesos from new borrowings. In dollar terms, our total debt reached 214 million dollars. We stand our net debt at $207 million at the end of this quarter.
Speaker Change: Regarding capital expenditures, we are located 815 billion pesos, mostly for maintaining capex.
Speaker Change: As a result as a slowdown in demand we are working on adjusting our capex or maintaining this plus to the current scenario.
Speaker Change: During the quarter, the company generated cash and financial activities for.
Speaker Change: 16 billion pesos, mainly from new borrowings in dollar terms, our total depth reach $214 million.
Speaker Change: Sending our net debt of $207 million at the end of this quarter with aspiration of 1.3 years.
Marcos Isabelino Gradin: With a duration of 1.3 years, Breaking it down by currency, the dollar-denominated debt represents 65% of the total debt, while the rest is in pesos. Now for our final remarks, I would like to hand the call back to Sergio. Thank you.
Speaker Change: Breaking it down like currency that always amazed to Denver represents 65% of the total depth, while the arrest issue basis.
Now for our final remarks, I would like to hand, the call back to Sergio Thank you.
Sergio Faifman: Thank you, Marcos. Now, to finalize the presentation, I would please ask you to turn to slide 13. As we mentioned, we started a new year in a very challenging environment, marked by a significant drop in activity levels. The effect of the transition to the new government, the repercussions of the stabilization plans, and adverse weather conditions combine to create a scenario full of challenges for the construction industry. It is in moments like this where we reaffirm our conviction to debate future development, failing on our strength and efficiency.
Sergio: Thank you Marcos now do you think I liked the presentation.
Sergio: Due to time just lives her team.
Sergio: As we mentioned we started the new year, they need, Tennessee, and Balan Medicaid I think that in drop in activity levels.
Sergio: The effect of the transition to the new governments that a proportion also published some plants and adverse weather conditions combined to create H B Fuller.
Challenging for the contractual keen to see.
Sergio: At this moment like this where we reaffirm our conviction to debate on future development.
Sergio: Hum.
Sergio: Honestly it senses.
Sergio Faifman: We are convinced that the country has huge growth potential waiting to be unlocked. The decreasing inflation and the normalization of some key economic variables make us believe that we are on the right path to lay the groundwork for addressing the infrastructure gap. Loma made very important investments in capacity in the recent past that are now contributing to support our result through better efficiency. We are determined to protect our profitability and very focus on our cash management and reducing our capex programs for this transition period. We are confident that we are in an excellent position to embrace the upcoming positive economic cycle.
Sergio: We are cognizant that the country has few dozen shelf waiting to be unlocked.
Sergio: So the question closely and the normalization of some key economic combined make us believe that we are on the right spot to light doesn't work without Brazil.
Speaker Change: Got it.
Speaker Change: No Mike made very important investment and capacity in some parts that are now on Q1 to support our HUD, who better efficiencies you have the time.
Speaker Change: To protect our profitability I'm very focused on our cash management and our Capex program for this transition period. We are comfortable that we are in excellent position to him, but I yeah.
Speaker Change: Call me, because she didn't economic cycle.
Sergio Faifman: Finally, I would like to thank all our employees for their commitment and extend my gratitude to the rest of our stakeholders. This is the end of our prepared remarks; we are now ready to take questions. Operator, please open the call for questions. Thank you. We will now conduct a question and answer session.
Speaker Change: Finally, I would like to thank all our employees.
Speaker Change: <unk> commitments.
Speaker Change: And my gratitude to the rest of our stakeholders.
Speaker Change: End of our prepared remarks, we are now ready to take questions.
Speaker Change: So let's open the call for questions.
Speaker Change: Thank you we will now conduct a question and answer session. If you'd like to ask a question. Please press Star then one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May Press Star then two if you would like to remove your line.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset prior to pressing the key. Once again, press 1 on your telephone keypad. We would also like to ask that you limit your questions to one question and one follow-up. Please, if you have additional questions, you may requeue for those questions, and they will be addressed. Also, please note that Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster. The first question comes from Alexandra Obregon of Morgan Stanley. Please go ahead. Hi Loma Negra team, thank you for taking my question.
Operator: We will now conduct a question and answer session. If you would like to ask a question, please press star then 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star then 2 if you would like to end the conversation.
For participants using speaker equipment, it may be necessary to pick up your handset prior to pressing the keys once again star one on your telephone keypad.
Speaker Change: We would also like to ask that you limit your questions to one question and one follow up. Please if you have additional questions you may re queue for those questions and they will be addressed.
Speaker Change: Also please note that Mr. Sergio five men will be responded in Spanish immediately following an English translation. Please hold momentarily, while we assemble our roster.
Speaker Change: The first question comes from Alexandra <unk> with Morgan Stanley. Please go ahead.
Alejandra Obregón: Hi Loma Negra team, thank you for taking my question. I guess it's related to your comment on maintenance. You mentioned that you're doing some maintenance during the winter. So I was just wondering if you could talk about how this compares versus last year, meaning how long it will last this time around and how much of your capacity you will be carrying out this sort of maintenance. That's perhaps the first question on my end.
Alexandra: Hi team. Thank you for taking my question.
Alexandra: I guess, it's related to your comment on maintenance you mentioned that you're doing some maintenance during the winter. So I was just wondering if you can talk about how these comparison versus last year I mean, how long will it last time around and how much of your capacity will be there.
Alexandra: Marrying out this sort of maintenance that that's perhaps the first question on my end.
Alexandra: Yeah.
Yeah.
Sergio Faifman: Hi Alejandra, thank you for the question. Our capacity today is approximately at 50%.
Speaker Change: He will be coming out.
Speaker Change: Yeah.
Speaker Change: No I got Lucky I always tell somebody onboard.
I mean, they're just wonderful gentle nowadays or capacity well that's at 50%.
Sergio Faifman: Today, our capacity is more or less at 50%. Obviously, with this level of activity, we have an improvement in what has to do with factory maintenance costs.
Speaker Change: Oh, you mean.
Speaker Change: Yeah no.
Speaker Change: Let me call that ended up getting a lot of uncollectible I'm getting into the holiday.
Speaker Change:
Speaker Change: Nevertheless, we.
Speaker Change: We have a any kind of improvement.
Speaker Change: Thus, we can through cost efficiency.
Sergio Faifman: Due to the fact that the factory is closed for several months, it can be optimized so that we don't have to work overtime on weekends.
Speaker Change: I don't know how he got he brought it up can you talk about I'm not at all hard to quantify exactly.
Sergio Faifman: When the facility is in a halt, we can gain from less working costs due to extra hours and all that stuff.
Speaker Change: When the facility is called we can become a gain from a working class people extra I'll work on all of them.
Sergio Faifman: And also because of the contracts we had already signed and the operations in general in Argentina, the annual stops are the same; they continue to maintain the winter.
Speaker Change: You don't need them properly.
Speaker Change: Dania market models.
Speaker Change: And I can do you know a lot about asking like if you're likely to be a Monday and in India.
Sergio Faifman: And also, due to the contracts that we signed in the past, the huts in the winter are going to maintain a similar schedule.
Speaker Change: And also do you do that the contracts that we signed in the past that the.
Speaker Change: How can the winter Hum along two.
Speaker Change: I've seen no schedule.
Speaker Change: So what can I make this particular mandate, but it can vary in gasoline demand.
Speaker Change: <unk> got a lot about here my shout out for my math.
Speaker Change: Market wide commendable.
Speaker Change: During that time.
Speaker Change: Those four months, probably we're going to use that to.
Speaker Change: Two more gradually.
Speaker Change: You can start using it for the for the main things that that we had planned.
Speaker Change: Yeah.
Speaker Change: Got to that that that was very clear and I guess, a second question related to your utilization and dispatches.
Speaker Change: So where we're coming from a period, where you potentially reached like 7 million tons per year that was the peak of your word dispatches during 2022 2023 maybe and now we are seeing things normalizing. So what would be like a fair assumption, where do you think dispatches will normalize in the foreseeable future once things.
Speaker Change: Diabolize, it's perhaps 6 million tons, a a run rate level, where you guys are thinking of you were at capacity or is there any other level that we should think of as a more normalized figure.
Speaker Change: Yeah.
Speaker Change: Now whether that can have sort of come off and on E. P. M.
Speaker Change: Who do you see.
Speaker Change: Seeing that there probably there.
Speaker Change: First quarter is going to get the data so.
Speaker Change: Uh huh.
Speaker Change: We must hold them for any country.
Speaker Change: But I wonder if you might be better not only because of the fallout of the presentation plan under transition and you go up on it but also due to England and Guava E. L F.
Speaker Change: We have not broken the quarter near the director until the Microsoft even though the range continuing in April we have seen some.
Speaker Change: Some better a lot of them have Judy on the Wellington.
London.
Speaker Change: He didn't make what I'm doing well maintain or maintain it in D&O read now mode D. C. S E Xian it convey yamaguchi.
Speaker Change: So looking ahead, we foresee a gradual recovery.
Speaker Change: Obviously pending.
Speaker Change: Pending on what are the next movement for the government.
Speaker Change: And then the evolution of the political dynamic.
Speaker Change: Okay, but it can't be done.
Speaker Change: Xi'an, the Lockheed bucket to be calculated and remedial better tomorrow.
Speaker Change: We got people that I've got it.
Speaker Change: For example.
Speaker Change: Hum.
Speaker Change: I'll be with Bill.
Speaker Change: Assets grew up.
Speaker Change: Through the Congress that would be Oh.
Speaker Change: Third point there.
Speaker Change: Good show some some more.
Speaker Change: Public works, even better in the future.
Speaker Change: Yeah.
Got you. Thank you. Thank you for the very comprehensive response, and and and and and thank you for taking my question.
Speaker Change: No.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: The next question comes from Petro Malhotra with Latin Securities. Please go ahead.
Petro Malhotra: Are you still if you owe them articles.
Petro Malhotra: Well. Thank you for taking my question.
Petro Malhotra: I wasn't always weed.
Petro Malhotra: We've got a host of national public works on newer fixed scope.
Petro Malhotra: Do you believe it will be the main driver for demand in the coming months.
Speaker Change: Alright, Thank you for the question.
Speaker Change: The name Okay. Good parity.
Speaker Change: You can see in the tender in India, plus young people are gonna be a podium Adam if you can look at how you address how that didn't.
Speaker Change: Amanda had idea.
Speaker Change: We understand that the macro situation that we have seen in terms of.
Speaker Change: Next time inflation could.
Speaker Change: It would be part of the recovery that we might see them day.
Speaker Change: It can be a trucking oil maybe Jackie I used to only be a couple of people to guide EMI.
Speaker Change: The bulk of it are you on that I am on the MD&A.
Speaker Change: I've got two children.
Speaker Change: Hey, Matt.
Speaker Change: For example, the recent news on their in.
Speaker Change: The offering.
Speaker Change: Mortgage loans.
Speaker Change: Could be another sign of.
Speaker Change: This recovery.
Speaker Change: A lot of them all of them downloaded <unk> geography and be it on the last day.
Speaker Change: The media impact that Hey, I am I will not compromise on that for the inkjet battery demand.
Speaker Change: Got it all.
Meanwhile, we're not provinciality tendency and I will not be on the sidelines.
Speaker Change: I like to hit a few impact Boyd.
Speaker Change: But broadly.
Speaker Change: Yeah.
Speaker Change: The problem with this deal.
Speaker Change: No Andy in the agreement made with the government.
Speaker Change: Yeah.
Speaker Change: The public works.
Speaker Change: At the provincial level he bought a handful of enjoy today in blue shield of human there, even though she owners at the Seattle market.
Speaker Change: You bet.
Speaker Change: Anita you're connecting our estimate on.
Speaker Change: Yes.
Speaker Change: When you got a bunch of them.
Speaker Change:
Speaker Change: Andy.
Speaker Change: Hum on investment.
Speaker Change: This no cultural half that would be helpful. That's why you're going to have a lot of a lot of.
Speaker Change: Russia waiting for.
Speaker Change: More paper all the conditions can hold up the stock.
Speaker Change: Thank you very much for your own sort of dwarfs are really helpful.
Speaker Change: Yeah Michael.
Speaker Change: Yeah.
Speaker Change: The next question comes from Daniel Rojas with Bank of America. Please go ahead.
Daniel Rojas Vielman: Good morning, gentlemen, thank you for taking my question. Its really simple I was just hoping you guys could give us some sense of the pricing environment, what you've gone through in the last couple of months with the difficult economy.
Daniel Rojas Vielman: Environment, how do you see pricing going forward and then overall the industry responding to.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Hi, Danielle Thank you for your question.
Speaker Change: Now let me go Mercado Pago that we're gonna Thomas.
Speaker Change: Okay.
Jenny can update you on that and it will be up but I love to say, yes.
Speaker Change: The metal forming that embargo.
Speaker Change: Was we just mentioned the dynamics of the suite.
Speaker Change: I was going to come from.
Speaker Change: For example, that's not profitable.
Speaker Change: We should keep them all at the same levels that we have shown.
Speaker Change: Hello, Hello, Vanessa woman Pamela.
Speaker Change: Do you need that incremental gain.
Speaker Change: Possibly a couple right now.
Speaker Change: I will not recoup it I assume that I arrived with a whole new way.
Speaker Change: And regarding volumes.
Speaker Change: We are optimistic that the worst of the boat space might have happened in the past SKU and that we're going to see some.
Speaker Change: Some global improvement in the next people.
Speaker Change: Additionally, the board of bulky, but you won't see it.
Speaker Change: Tumbleson comprehend the chop it up.
Speaker Change: Danielle.
And that I think you make a radical and company. If you sort of told me that he had that immediately.
Speaker Change: Yeah.
Speaker Change: Yeah, we are.
Speaker Change: For the second half of the year, probably some from getting too.
Speaker Change: Energy inputs that will help.
Speaker Change: Help us improve our hours.
Speaker Change: Okay.
Speaker Change: If I may follow up a bad one you mean natural gas prices trend.
Speaker Change: Related to two acquired gas that the message right.
Speaker Change: Right.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: I'm actually kind of hit the Gallo, yes, but I think I'm going to talk about.
Speaker Change: Sure Glenn.
Speaker Change: Sure.
Speaker Change: Many people out of the normal.
Speaker Change: Saturday kind of important.
Speaker Change: Hello.
Speaker Change: <unk> balance sheet.
Speaker Change: Yes, we mean we.
Speaker Change: You mean from Olin achieved primarily yes.
Speaker Change: Even though we have shown in this.
Speaker Change: As far as part of the year.
And improvement.
Speaker Change: Yeah.
Speaker Change: Problem, you're going to see further improvements for that for the second half of the year.
Speaker Change: When we start using the new contract.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: You can for taking my questions.
Speaker Change: Okay.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Diego, how long for closing remarks.
Sergio Faifman: [inaudible]
Sergio Faifman: So during the term, in those four months, we're probably going to use that to more gradually use that period for the maintenance that we have planned.
Speaker Change: Okay.
Alejandra Obregón: Gotcha. That was very clear.
Alejandra Obregón: And I guess a second question related to your utilization and dispatches. So we're coming from a period where you potentially reached 7 million tons per year. That was the peak of your dispatches during 2022, 2023, maybe. And now we are seeing things normalizing. So what would be a fair assumption? Where do you think dispatches will normalize in the foreseeable future once things stabilize? Is perhaps 6 million tons a run rate level at which you guys are thinking of your capacity? Or is there any other level that we should think of as a more normalized figure?
Diego: Thank you very much for joining us today, we really appreciate your interest in our company and we look forward to meeting you again in our Med school.
Sergio Faifman: The truth is that we are seeing, in principle, a first quarter that would be the hardest.
Operator: Again, if you have a question, please press star then 1. The next question comes from Pedro Malhart with Latin Securities. Please go ahead.
Sergio Faifman: Considering that probably the first quarter is going to be the toughest in terms of the level of activity.
Pedro Malhart: Hi Pedro. Thank you for the question. The truth is that we understand that part of the stability that is being achieved, both in inflation and in the type of change, could begin to modify the drivers so that demand is reactivated.
Sergio Faifman: Not only because of the change of government and the measures but also because of some climatic issues.
Sergio Faifman: We understand that the macro-stabilization that we are seeing in terms of effects and inflation could be part of the recovery that we might see in the next couple of months. For example, the recent news on the offering of mortgage loans could be another sign of this recovery.
Sergio Faifman: Not only because of the fallout of the stabilization plan and the transition of the new government but also due to inclement weather.
Sergio Faifman: On the other hand, as we just mentioned, we believe that the law should impact on some commitments with the provinces to resume some public works or even some provinces that are getting some funding and need the support of the nation to be able to move forward.
Sergio Faifman: Although the rains continued in April, it is noticeable a little better in terms of activity compared to March.
Sergio Faifman: We believe the submissive bill and the agreements made with the governors would boost public work at the provincial level.
Sergio Faifman: Even though the rains continue in April, we are seeing some better levels of activity.
Sergio Faifman: And, for example, within this law, the special investment regime is included, which we believe that there are several investments that are ready to go out, and with this new regime, they could go out very quickly, which would also require significant consumption for the country.
Sergio Faifman: Therefore, we understand that from now on, the market should gradually improve, obviously depending on the news and the actions that the government manages to take forward.
Sergio Faifman: And the boost in investment that this law also has, that would also be a driver. There are a lot of projects waiting for more favorable conditions in order to start. Thank you very much for your answer. It was really helpful.
Sergio Faifman: So, looking ahead, we foresee a gradual recovery, obviously pending on what the next movements of the government and then the evolution of the political dynamics.
Daniel Rojas Vielman: The next question comes from Daniel Rojas with Bank of America. Please go ahead. Good morning, gentlemen. Thank you for taking my question. It's really simple.
Sergio Faifman: We believe that, for example, the approval of the Basic Law and the Tax Package could be a start to resume some public works and to be able to bring out some other ones. For example, if the...
In the meantime, we remain available for any questions that give me a call. Thank you very much.
Sergio Faifman: For example, if the omnibus bill passes through Congress, that would be a third point that would show some more public works in the near future.
Alejandra Obregón: Gotcha, thank you for the very comprehensive response and thank you for taking my question. Again, if you have a question, please press star then 1. The next question comes from Pedro Malhart with Latin Securities. Please go ahead.
Diego: Yeah.
Daniel Rojas Vielman: Good morning, gentlemen. Thank you for taking my question. It's really simple.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].
Daniel Rojas Vielman: I was just hoping for you guys to give us some sense of the pricing environment, what you've gone through in the last couple of months with the difficult economic environment. How do you see pricing going forward and, overall, the industry responding to the challenges we're seeing? Thank you.
Sergio Faifman: Hi Daniel, thank you for the question. The market dynamics, a little of what we commented on, we see that for some actions that we have done, the profitability for the future should be maintained or even increased a little.
Sergio Faifman: Daniel, as we just mentioned, the dynamics of the industry are going to, for example, in terms of profitability. We should keep more or less the same levels that we have shown.
Sergio Faifman: And regarding volumes, we are optimistic that the worst should have passed and that there should be a point of inflection with a gradual recovery.
Sergio Faifman: And regarding volumes, we are optimistic that the worst phase might happen in the first queue and that we are going to see some gradual improvement in the next few quarters.
Speaker Change: Yeah.
Sergio Faifman: Additionally, due to the situation, we are already finding, for the second part of the year, some advantages that have to do with prices, especially thermal energy, that should improve our costs as well.
Sergio Faifman: We are seeing, for the second half of the year, probably some gains in energy inputs that will help us improve our system. If, if I may follow up on that.
Speaker Change: [music].
Daniel Rojas Vielman: If I may follow up on that one, you mean natural gas prices and the ability to acquire gas through the natural gas pipeline, right?
Sergio Faifman: Yes, basically, our energy matrix today is practically all gas, and we refer to gas prices with reductions. Although in the first quarter, we already had significant reductions compared to last year, with additional reductions for the second quarter and the second half of the year.
Sergio Faifman: Yes, we mean thermal energy, primarily gas, even though we have shown in this first part of the year an improvement year-on-year, probably we are going to see further improvements in the second half of the year when we start using the new contract. [inaudible]
Daniel Rojas Vielman: Okay, thank you again for taking my questions.
Diego Jalon: This concludes our question and answer session. I would like to turn the conference back over to Diego Jalon for closing remarks.
Diego Jalon: Thank you very much for joining us today. We really appreciate your interest in our company, and we look forward to meeting you again on our next call. In the meantime, we remain available for any questions that you may have. Thank you very much. The conference is now concluded.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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Speaker Change: Yeah.