Displaying items by tag: Cementos Argos

US: Colombia's Cementos Argos announced an agreement with US-based Vulcan Materials for the acquisition of cement, concrete, blocks and port assets in Florida, USA worth a total of US$720m. The acquisition will consolidate its participation in the growing market in the south east of the US.

The assets that are part of this transaction increase the Cementos Argos' installed cement capacity by 3.5Mt/yr, thanks to the integrated cement plant Newberry, Florida (1.6Mt/yr) and grinding mills in Tampa and Port Manatee (1.9Mt/yr combined). The deal also features 69 ready mix concrete plants with 372 mixers and an annual production capacity of 3.3 million m³ and 13 concrete block production plants.

"This new transaction fits perfectly with the company's growth strategy, not only for the size and quality of the assets but also because of its privileged location, the growth potential and its complementary operation with our current assets," said Jorge Mario Velasquez, CEO of Cementos Argos. "We are doubling our cement production capacity in the United States, in a market like Florida, where the growth forecast for the coming years is expected to double the already encouraging growth estimates. Florida is one of the fourth largest state economies, with the highest cement consumption and population of the US."

Through this acquisition, Cementos Argos becomes the second-biggest producer of cement in Florida and in the south-east of the US. With this, the company will achieve a total installed capacity, in all of the locations in which it has a presence, of 20Mt/yr.

Colombia: Colombia's Superintendent of Industry and Commerce (SIC) has launched an investigation into possible anti-competitive behaviour within the cement industry. According to the regulator, the investigation relates to alleged 'sustained and unjustified increases in the price of cement since January 2010.'

In 2008 the regulator issued fines in excess of US$1m to cement firms for involvement in a market sharing agreement. Cementos Argos has denied involvement in price fixing or market sharing.

Honduras: Lafarge has sold its cement operations in Honduras to Cementos Argos for Euro232m. Sold assets include a 1Mt/yr cement plant and a 0.3Mt/yr grinding plant. The sale is subject to regulatory approval.

The transaction had a total enterprise value of Euro435m based on a 2012 earnings before interest, tax, depreciation and amortisation (EBITDA) multiple of 8.6. Lafarge owns 53.3% of its Honduran subsidiary, Lafarge Cementos SA de CV.

Colombia: Cementos Argos (Cemargos) has reported a year-on-year fall of 79.2% in net profits to US$38.9m for the first half of 2013. The Colombian cement producer attributed the decline to a sale of assets in the first half 2012 that had artificially inflated net profits.

Revenue for the first half of 2013 was US$1.24bn, a rise of 9% from US$1.2bn in the first half of 2012. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 23% to US$261m from US$212m. In the first half of 2013 Cemargos shipped 5.5Mt of cement, a 1% year-on-year increase.

"The results reflect the positive trends being seen in our markets and the strategies of segmentation, price and penetration being implemented," said the company in its financial statement. Cemargos said that columes recovered in Colombia in the second quarter of 2013 and the Caribbean region continued to support growth.

Dominican Republic: The Dominican Association of Cement Producers (Adocem) swore in Carlos Gonzalez as its president for 2013 – 2014. Gonzalez, who is also president of Cemex in the country, joins Gabriel Ballestas of Cementos Argos as treasurer and Jose Caceres of Cementos Cibao as secretary.

Colombia: Cementos Argos has raised US$750m from the preferred shares-issuance in the local and international markets, according to a letter to the Colombian financial services watchdog Superfinanciera. The share-issuance was oversubscribed, with demand amounting to US$1.18bn from more than 14,000 Colombian and international investors.

Of the interested investors, 65% were local investors and 35% were from abroad. Additionally, 58% of the interested parties were institutions and 42% were individuals. The proceeds from the transaction will be used by the company to support its growth in the cement and concrete industry.

Eagle Materials has picked up two cement plants in the US from Lafarge with a combined capacity of 1.6Mt/yr for US$446m. The deal also included six distribution terminals, two aggregates quarries, eight ready-mix concrete plants and a fly ash business.

Following our column in August 2012 following an acquisition in India we decided to ask a similar question: how much are American cement plants worth?

Eagle's acquisition now increases its presence in the Midwest and South Central regions of the US, giving it a rough line of plants across the country nearly connecting Lake Michigan to the Gulf of Mexico. As shown in our industry report on the US between 2005 and 2011 cement consumption fell in both the states the plants are located in. Missouri's consumption fell by 45% from 2.82Mt to 1.56Mt, just above the US national average. By contrast Oklahoma's consumption only fell by 11%, from 1.6Mt to 1.43Mt, the fourth smallest decline in the country.

However, Eagle has demonstrated financial health in contrast to the US sector as a whole, reporting a 21% rise in total revenue in the quarter to 30 June 2012 and a 60% rise in operating earnings year-on-year in the quarter to 31 March 2012. The combined operations at the two plants generated about US$178m in revenue during the year ending in June 2012. By contrast Eagle Materials' revenue totalled US$529m during the same period. The plants' additional capacity will increase Eagle's total by about 60%.

Lafarge are still thinking big though, with the proviso that Eagle will supply certain Lafarge operations with cement for four to five years, as well as an agreement with a Lafarge affiliate to supply low-cost alternative fuels to the acquired operations. According to its 2011 annual report North America comprised 11% of Lafarge's cement sales. Lafarge's sales in the US remained flat in 2011. In that year the company's capacity was 12.8Mt with a 12% market share. This picture has started to change in 2012 with a reduced loss in earnings before interest, tax, depreciation and amortisation (EBITDA) in the first quarter followed by volume and sales increases of above 10% in the second quarter.

Back in June 2011 Cementos Argos picked up two plants from Lafarge in Roberta, Alabama and Harlyville, South Carolina for US$760m with a combined capacity of 2.7Mt/yr. As with the Eagle deal the sale included a number of peripheral assets including a clinker mill, cement mixer lorries and a marine port.

Cementos Argos recently put the world average at US$250m/t when publicising the expansion of its Rioclaro plant. The European Cement Association reports the figure at being above US$200m/t on its website. In August 2012, at the time of the potential CRH acquisition in India, the cost of Indian cement production capacity was placed at US$110/t-US$120/t.

Perhaps the question we should ask is how much is a US cement plant worth when it used to belong to Lafarge. Both the Cementos Argos sale and the Eagle deal worked out at US$280/t including all the ancillaries. The actual question we should ask is why has Lafarge chosen these specific plants to sell to a competitor in the US market?

Colombia: Cementos Argos has announced the appointment of four new vice-presidents following of internal reorganisation. Following the promotions Jorge Mario Velasquez, president of Argos, commented that the moves had met the right balance of youth and experience.

Juan Luis Munera, a commercial law attorney with seven years service with Argos, has been appointed to vice president for legal and sustainability. Carlos Horacio Yusty, an engineer specialising in industrial management systems with 16 years service with Argos, has been appointed to vice president of finance. Mauricio Ossa, a business manager with 15 years service with Argos, has been appointed regional vice president of the company's Caribbean operation. Tomas Restrepo, currently vice president of innovation with five years service with Argos, will serve as regional vice president of Argos' Colombian units.

Columbia: Columbia's largest cement company, Cementos Argos (Cemargos), has named Jorge Mario Velásquez as its chairman.

A civil engineer with over 30 years' experience in cement, Velásquez replaces José Alberto Vélez, who remains at the head of parent company Grupo Argos. The changes are part of the company's ongoing corporate restructuring process, which includes splitting off non-cement assets to its investment arm, Inversiones Argos.

Colombia: Colombia's Grupo Argos has announced that its consolidated net profit in the first quarter of 2012 was US$125m, a fourfold increase from that seen in the first quarter of 2011. The group said that it had seen a surge in growth in its most significant business areas, namely cement and electricity. The group, which has a 61% stake in Cementos Argos, said that its earnings before interest, taxes, depreciation and amortisation, were US$250m.