1 - Argos

Argos Innovation Center, EAFIT University, Medellin, Colombia
Cementos Argos S.A
Corporate presentation – 2015
New presentation of grey and white cement of 1kg in Colombia
This document contains forward-looking statements and information related to Cementos Argos
S.A. and its subsidiaries (together referred to as “Argos”) that are based on the knowledge of
current facts, expectations and projections, circumstances and assumptions of future events.
Various factors may cause Argos’ actual future results, performance or accomplishments to differ
from those expressed or assumed herein.
DISCLAIMER
2
If an unexpected situation presents itself or if any of the premises or of the company’s
estimations turn out to be incorrect, future results may differ significantly from the ones that are
mentioned herein. The forward-looking statements are made to date and Argos does not assume
any obligation to update said statements in the future as a result of new information, future
events or any other factors.
Leading pure cement player in our core geography…
3
Regional
Divisions
Installed
cement
capacity
COP 5.8 Tn*
Revenues
vs 2013 ∆ +17%
vs 2Q14 ∆ +26%**
USD 1,401 M
vs 2Q14 ∆ -0%
EBITDA
Installed
ready-mix
capacity
Countries
COP 3.5 Tn*
USD 2,908 M
vs 2013 ∆ +9%
18 M m3
14
6M15
2014
20 M MT
COP 1.1 Tn
COP 678 Bn
vs 2013 ∆ +8%
vs 2Q14 ∆ +31%
USD 534 M
USD 273 Bn
vs 2Q14 ∆ +4%
vs 2013 ∆ +2%
Market Leadership:
Colombia
Caribbean &
Central America
1 out of 2
#1
outright
Market
leader
leading producers
47%
13
USA
2nd
largest cement
producer in the
Southeast
share of the seaborne
trade market for
2nd
largest RMX
cement and clinker
producer in USA
Emerging Major:
5th largest producer in Latam
9Grinding
~390
Cement
plants
RMX plants
Revenues by geography 2Q15
stations
Revenues by product 2Q15
Other
Caribbean &
Central America
Other
0%
1%
19%
Colombia
38%
RMX
Cement
46%
53%
USA
42%
Cementos Argos S.A. has a presence in Venezuela through its subsidiary Corporación de Cemento Andino C.A., which is currently a party to a legal proceeding regarding the expropriation by the Venezuelan government of its plant located in the state of
Trujillo, Venezuela. Any compensation to which Cementos Argos S.A. or its subsidiary Compañía de Cemento Andino C.A. may be entitled to is subject to the decisions of the relevant courts in the Bolivarian Republic of Venezuela. Cementos Argos S.A.
has written-down to zero its investment in the plant.
3
* 1 trillion (Tn) = 1,000,000,000,000 - FX as of December 31st, 2014 : COP 2,392.46 / USD: as of March 31st, 2015: COP 2,576.05 / USD
** Comparative vs 1Q14 IFRS figures
…in more than 70 years of profitable and
continuous growth

 1934:
Compañía de
Cementos
Argos
 Merger of
(currently
8 cement
Grupo Argos)
companies
was founded
 Acquired
 1944:
Southern
Cementos
Star
del Caribe
Concrete
(currently
Company
Cementos
Argos) was
founded


Acquired
Holcim’s
interest in a
Caribbean JV
and Caricement
Antilles

Divested noncore coal asset
to Vale
Acquired
assets from
Lafarge in
USA

Successful
share
issuance

Acquisition
of Lafarge
Honduras

Included in
DJSI
2015
2014
2013
Merger of 3
ready-mix
concrete
companies
2012
2011
2010

Acquired
assets from
Vulcan in
Florida –
USA

Acquired
assets in
French
Guiana

New
dispatch
center in
Cartagena
plant in
Colombia
2009
2008
2007
1934
1944
2005
2006



Source: Cementos Argos
4
Acquired
RMCC in US
Acquired
Cementos
Andino

Duty free zone
is created in
Cartagena

Commenced
operations at
Cartagena plant

Expanded
operations in
Suriname
Spin-off of
non core
assets to
Grupo Argos

Acquired
cement
terminal in
Puerto
Rico

Ongoing
expansion
projects in
Colombia:
-
Rioclaro
-
Sogamoso

Ongoing
Harleyville
expansion
Investment drivers for Cementos Argos
1
Clear
Corporate
strategy
5
2
Competitive
advantages
3
4
Experienced
management with
a proven track
record
Financial
flexibility to
grow
Ability to seize
the unique
growth
opportunities
1
Clear Corporate strategy…
Continue to focus
on our core
business and
consolidate
market leadership
in our existing
markets
1
4
Provide our
customers with
the best value
proposition
Selectively
pursue attractive
opportunities
3
Improve
operating
efficiencies and
reduce
production costs
2
Continue
enhancing
distribution &
logistics network
6
5
Maintain emphasis
on innovation, our
people & sustainable
development
1
…focused on the advantages of three
contiguous regions
Logistics synergies
given our geographic
area, port
infrastructure and
maritime know-how
Countries with
consumption per
capita growth
potential
7
Balance
between
developed &
emerging
economies
Economies
with different
market
cycles.
2
Competitive Advantages: Vertically integrated
operations optimize flexibility, stability and profitability
Limestone
Colombia
Regional
Division
Energy
Caribbean & Central
America Regional Division
Clinker
Vertical integration
and interconnectivity
boosted by our
geographic footprint
Cement
Aggregates
RMC
USA
Regional
Division
8
Transport &
logistics
2
Competitive advantages: Strategically located assets and a
broad logistics and distribution network enhances flexibility
Well established distribution network
Strategically located assets
24
USA plants provide additional flexibility
Low cost cement
production &
Export Potential


Efficient cement plants with access to transport links,
both rail and sea
Potential to supply our Caribbean and Central America
markets via exports from the port in Mobile, Alabama
Ports /
Terminals
13
Cement Plants
~390
RMX Plants
Roberta
Harleyville
Newberry
~70
Dispatch facilities &
warehouses
~2.800
Mixers
9
Grinding
Stations
Source: Cementos Argos
Currently supplied
from Cartagena
Cartagena
Potential supply
Cartagena plant enhances regional linkages

State of the art
facility


9
Efficient dry line, with production capacity of 2.3 mm
MTPA of cement
Efficient access to low cost limestone reserves & direct
access to a dedicated port
Operates in a zone with favourable tax rates and tariff
exemptions secured to 2028
Enhanced flexibility and
coverage capabilities to
supply local and
regional markets
2
Competitive advantages: Our value proposition, tailor-made
business model for each customer segment
Our cement can be more than a commodity
One High-value
brand
Differential
service
Commercial
assistance
Technical
assistance
Technological
platform
For retail customers
For industrial customers
Value propositions offered include…
Value propositions offered include…
 Promote our customers’ business growth
 Tailor-made concrete solutions based on a unique
understanding of each project
 Develop initiatives to create demand
 Access to technology and equipment (on-site plants, placement
equipment)
 Proximity and ease of access to our products
 Specialized technical assistance: Durability, concrete
technologies
 Recognition and use of our brand
 Lead time optimization
With proven results:
Satisfaction and loyalty levels above industry
averages
10
Increasing market share in infrastructure
3
Experienced management with proven track record
Board of Directors
+ 20
7 Members
5 Independent*
years of average
experience in the
industry
Colombia
Regional
Division
Caribbean & CA
Regional
Division
Tomás Restrepo
Mauricio Ossa
Eric Flesch
Since 2007 at Argos
Since 1996 at Argos
Since 1979 at Argos
USA Regional
Division
Jorge Mario Velásquez
CEO
Since 1983 at Argos
Senior
management
Legal and
Institutional
Affairs
Sustainability
Juan Luis
Múnera
María Isabel
Echeverry
Since 2005 at Argos
Since 1997 at Argos
José Alberto Vélez
Chairman
Talent and
Organizational
Architecture
Technical
Innovation
Jorge I Acevedo
Victor Lizarralde
Camilo Restrepo
Carlos Yusty
Since 2005 at Argos
Since 1982 at Argos
Since 2005 at Argos
Since 1996 at Argos
Finance and
Shared Services
With a proven track record
Completed organic growth
Examples:






Cartagena expansion:
Colombia power plants:
Panama grinding expansion:
Cartagena dispatch center:
White cement conversion:
Oil well cement development:
Examples:
USD 560 M
USD 68 M
USD 65 M
USD 35 M
USD 23 M
USD 1 M
+









Source: Cementos Argos
11
Wetvan O. Puerto R: USD 18M
Lafarge Guayana F: USD 69 M
Activos Vulcan FL: USD 720 M
Lafarge Honduras: USD 305 M
Lafarge EEUU:
USD 760 M
Holcim Caribe:
USD 157 M
RMCC EEUU:
USD 243 M
Cemento Andino:
USD 192 M
SSC EEUU:
USD 245 M
18%
Focus &
reorganization
Acquisitions
Examples:
+



2005: Merge of 8 cement
companies in Colombia
2012: Spin-off of non core
assets
Divestitures of non core
assets
+ USD 3.5 Bn
Funded & invested
during the last 10
years
CAGR Revenues
2010-2014
18%
CAGR EBITDA
2010-2014
* Two out of five independent members are certified following regulation related to BoD in Colombia
4
Financial flexibility to grow organically and to selectively
pursue strategic acquisitions
Our flexibility has been maintained by our operational strength and prudent management
Strong operating
cash flow
generation
+
Track record of
accessing capital
markets
+
Proceeds from
dispositions
+
Current investment
portfolio
+
Funds from
preferred shares
issuance
Potential growth
Planned organic growth
Inorganic growth strategy
Expansion in attractive markets:
Antioquia
Preparation for the USA
comeback
Sogamoso
 Expansion of installed capacity at
3 cement plants in Colombia
(Rioclaro, Nare and Cairo)

 + 900,000 MTPA of installed
capacity
 Investment value: USD93 M
 Completed: 2Q2015
 Additional mill at the SC plant:
Increase cement installed capacity
at Sogamoso plant located in
Boyaca-Colombia :

+ 2.3 M MTPA

Investment value: USD 450 M

Expected completion: 2018

Defined core geography

Synergies targeted from:
 Vertical integration
 Market growth
 Cost optimization
 Installed cement production
capacity from 1.0 mm to 1.5 mm
MTPA
 Savings from the use of
cementitious materials
 Investment value US$48 mm
 Completed: 2Q2015
Other Initiatives
Source: Cementos Argos
12

Increase use of alternative fuels

Energy matrix optimization

Reduction of clinker / cement ratio

Distribution network optimization
Three regions, One interconnected strategic area
Cementos Argos S.A. has a presence in Venezuela through its subsidiary Corporación de Cemento Andino C.A., which is currently a party to a legal proceeding regarding the expropriation by the Venezuelan government
of its plant located in the state of Trujillo, Venezuela. Any compensation to which Cementos Argos S.A. or its subsidiary Compañía de Cemento Andino C.A. may be entitled to is subject to the decisions of the relevant
courts in the Bolivarian Republic of Venezuela. Cementos Argos S.A. has written-down to zero its investment in the plant.
13
Colombia: Leader company in an attractive
market
Leading market position
Market share as of June 2015 Source: DANE – Cementos Argos
Competitive advantages
 Only producer with national network serving
all major population centers
 Vertically integrated operations
Otros
52%
 Ability to use low cost production and
dedicated port facilities for exports
Otros
58%
#1
42%
48%
Cement sales volume
 Distribution network that allows us to reach
final consumers
 Well positioned brand
 RMC mobile plants to be able to serve
infrastructure projects in areas with difficult
access
#1
RMX sales volume
Financial results
2011
2012
2013 2014 6M15
Cement volume sold (M MTPA)
RMC volume sold (M m³)
Revenues (USD M)
y-o-y Growth (y-o-y)
EBITDA (USD M)
EBITDA Margin
5.0
2.6
1,087
29%
351
34%
5.1
3.0
1,272
17%
449
35%
5.4
3.4
1,364
7%
484
35%
5.5
3.5
1,205
-12%
391
32%
2.9
1.7
538
-14%
157
29%
Best positioned to capture the opportunity
Infrastructure development
Infrastructure and
housing plans 2014-2024
Government
investment
USD 72 Bn*
~1.7% of GDP
Private investments
USD 66 Bn
~1.6% of GDP
* Calculated in 2014 with FX Rate of COP 1,920 / USD
14
Residential and commercial construction
Infrastructure deficit
Commercial need
Venezuela
135
Brazil
120
Colombia
108
Honduras
106
Peru
105
Costa Rica
103
Uruguay
80
Suriname
75
Mexico
69
Chile
50
Panama
Spain
 Emerging middle
class
80 +
below 35
years old
70-74
60-64
 Emerging cities
(as of 2012)
0.6 M units
Quantitative deficit
50-54
 Offices deficit
40-44
30-34
20-24
1.1 M units
10-14
0-4
6.0
4.0
2.0
0.0
2012
0.0
2.0
2020E
Qualitative deficit
4.0
 Between 2005-2012, household units grew by 255,000 p.a.
1= best
Housing deficit
+60%
 Government plan to build 1.2 mm houses during 2014-2018
40
13
Growing and young population
mm inhabitants
 Aprox. 145,000 houses were built each year
Source: Global Competitiveness Report 2014-2015 (analysis of 144 countries) / ANIF, Infrastructure Commission, DNP, Ministry of Transportation.
6.0
Source: Minister of Housing of
Colombia – DANE -DNP
First two waves under development =
COP 23 trillion (~USD$10bn)
1
st
wave
9
5
projects
granted
Argos
Plants
projects with
construction
works signed
2
nd
wave
$10.8 tn*
No.
1
2
3
4
5
6
7
8
9
15
First wave
Source: ANI - DNP
Argos
Plants
Bidding process
to be completed
by 3Q15
$12.0 tn
Conexión Pacifico 2
Honda - Girardot - Puerto Salgar
Conexión Pacífico 1
Cartagena - Barranquilla y Circ
Prosperidad
Conexión Pacifico 3
Perimetral del Oriente de Cundinamarca
Autopistas Conexión Norte
Autopista Rio Magdalena 2
Mulaló - Loboguerrero
Total - COP trillion
Future budgets
to be assigned
8 Already granted
5 Contracts signed
1 Pre-construction
Capex
Kms
No.
Second wave
1.3
1.0
1.8
98
190
37
1.0
147
1.3
1.1
1.0
1.3
1.2
10.8
231
153
146
150
84
1,236
1
2
3
4
5
6
7
8
9
Puerta de Hierro - Palmar de Varela
Pasto - Rumichaca
Villavicencio - Yopal
Santana - Mocoa - Neiva
Autopista al Mar 2
Santander de Quilichao - Popayan
Transversal del Sisga
Autopista al Mar 1
Bucaramanga - Barrancabermeja
Total - COP trillion
$19
tn
assigned to
$29
tn
for projects pending
12projects
to be granted during
2015
Capex Kms
0.5
1.6
1.9
1.5
1.5
1.2
0.5
1.5
1.8
12.0
$48tn
203
80
264
447
245
76
137
180
212
1,844
Status
Pre-constr.
Granted
C. Signed
C. Signed
Bidding
C. Signed
C. Signed
Granted
C. Signed
for future
budget
assignations
* 1 billion = 1,000,000,000 - 1 trillion = 1,000,000,000,000
Private initiatives: successful format to boost the infrastructure
sector in the country, with minor need for public resources
319
Private initiatives
presented
8
Approved
(3%)
50
Feasibility
study (16%)
projects to be
78%241
funded by privates
22%
The government funds up to 20% of
the total value of the project
3 under pre-construction
$7.1 tn granted
2 with contract signed
Without public resources
1
2
3
4
5
6
3 awarding process pending
First stage
Kms $Tn
225
1.0
Ibagué - Cajamarca
86
1.9
Chirajara - Villavicencio
325
1.3
Malla vial del Meta
350
0.4
Cesar - Guajira
256
1.3
Cambao - Manizales
491
1.13
Antioquia - Bolivar
Total
1,733 7,13
Status
Pre-constr.
C. Signed
Pre-constr.
Pre-constr.
C. Signed
Approved
5 Granted
$4.5 tn will be granted during 2H15
Second stage
Kms
193
7 Neiva Girardot
151
8 Tercer Carril Bogota -Girardot
120
9 Calarca - La Paila
Total
464
16
16
Source: Registro Único de Asociaciones Público Privadas (Ruapp & DNP)
95
Rejected
(30%)
With public
resources
Without public
resources
Projects in several sectors
168
Pre-feasibility
study (53%)
$Tn Status
0.7 Approved
2.4 Approved
1.4 U.Study
4,5
COP$11.6tn*
(USD$4.8 bn)
under aproval
and granting
process for 9
roadways
projects in
2015
* 1 billion = 1,000,000,000 - 1 trillion = 1,000,000,000,000
Market outlook based on the advances in infrastructure and
housing
First wave
1.Honda - Girardot - Puerto Salgar
2.Cartagena- Barranquilla
3.Conexión Pacífico 3
3
9
Funding by an
international
investment
bank
USD 1,200 M
Already with
financial
closing
Projects
awarded
COP 11 tn*
Second wave
8
Projects
awarded
6
Construction
contracts signed

New home sells
in a good

momentum
7.3% 2015E
Source: ANI, Camacol
Other projects
Credit lines were
opened with:
4Q15
•
•
•
Building
starts
IPC +6% COP and
Libor + 4% USD
FDN
Banco Agrario
IDB
PPP - Private initiative
COP 12 tn
17
6
8
Projects
approved
3 Pre- construction process
2 Contracts signed
3 Bidding process
6
Additional
Projects
expected to
be approved
Begging
3Q15
New home sells reached 81.3k units as of June, increasing 1.2%Y/Y
Building permits increased 24.3% in June, VIS 298% and No VIS 37%

“Mi Casa Ya” program is leading the housing starts in 2H15

“Pipe 2 ” program will add 61k home units (VIS) in 2016 and 69k in 2017
USA: Vertically integrated operations in
attractive regions
USA cement market is poised for rapid recovery…
Leading position with vertically integrated operations
 2nd largest cement producer in
the Southeastern region1
 2nd largest RMX producer in
the US (#1 or #2 player in
most RMC areas served)
121
USA
installed
capacity
~ 110 MTPA
 Comprehensive logistics
network (sea, land and
railway)
Cement Plants
RMC Areas
Grinding Facilities
Ports/Terminals
Financial results
M MTPA
128 128
117
97
71 68 70
76 80
86
93
100
108
115
121
2011 2012 2013 2014 6M15
Cement volume sold (M MTPA)
RMC volume sold (M m³)
Revenues (USD M)
Growth
EBITDA (USD M)
EBITDA Margin
0.6
4
475
9%
-27
1.6
5.1
664
40%
-7
1.8
2.8
1.5
5.4
7.1
3.5
748 1,092
585
13% 46%
18%
14
68
49
1.9% 6.2% 8.3%
Source: PCA - Summer 2015 Forecast
Ready for the US comeback
…we have operations in some of the most attractive US States
With superior demographics…
…and an increasing share of national cement consumption
Population annual growth
Southeast U.S. states¹
U.S. total
0.9%
0.4%
2012E
2014E
2016E
2018E
2020E
States where we are present**
2013
2014
Cement consumption (M
MTPA)
26.1
29.5
Share of cement
consumption (%)2
33%
34%
1.4%
2022E
** States where Argos is present, including: Incluye: Texas, Arkansas, Alabama, Calorina del Sur y Norte, Virginia, Georgia y Florida
18
Source: U.S. Census Bureau
¹ States where Argos is present
Market drivers taking a healthy upward trend
Bad weather days / Business days
Argos States - Quarterly
22%
32%
5 years
average
2Q15
average
Adverse weather conditions in
the 2Q are leading to a
higher market growth
in the 2H15
Building permits anticipate the positive
momentum of the market
Housing starts getting over the long term
average
7% M/M June, 1.33 million granted permits
12.3% M/M June, totaling 1.2 million units
2500
2000
2000
No of units (000)
No of building permits (000)
2500
1500
Long term average: 1,200
1000
500
1500
Long term average : 1,177
1000
500
0
2004
0
2003 2004 2005 2005 2006 2007 2008 2009 2010 2010 2011 2012 2013 2014 2015
2005
2006
2007
2008
2009
2010
2011
2012
2013
Highway bill is becoming a priority for the government
65%
Roads under poor
conditions
19
Source: Bloomberg - US Census Bureau
25%
Roads needing
significant repairs
•
USD 350 billion long term transportation
bill approved
•
Three-month extension of the Highway
Trust Fund (until October 29)
2014
2015
Caribbean & Central America: High growth
prospects and strategic interconnection of all regions
Geographic footprint
Cement volume sold
 One of 2 leading producers of
cement and RMC
Breakdown as of 2Q15
Trading
6%
Otros
Suriname
2011 2012 2013 2014 6M15
2.3
0.46
335
5%
87
26%
2.8
3.1
3.3
0.5
0.5
0.5
398
448 543
19% 12% 21%
89
103 165
22% 23% 30%
2.1
0.2
273
-1%
91
33%
2%
DR
53%
22%
25%
 Control 47%¹ of the seaborne trade
market for cement and clinker
Cement volume sold (MMTPA)
RMC volume sold (M m³)
Revenues (USD M)
Growth
EBITDA (USD M)
EBITDA Margin
Cement
Panama
 Logistics platform, ports and fleet of
vessels gives unparalleled access to
mainland and island markets
Financial results
Honduras - Market share
22%
10%
47%
Panamá - Market share
Cement
13%
Haiti
 Well-positioned in both, Panama
and Honduras, markets with great
potential
RMX
Other
5%
Honduras
Cemex
48%
47%
28%
 Only cement producer in Haiti,
and Suriname
Other
72%
Profitable and growing interconnectivity
Growth drivers
Honduras  High Infrastructure needs: Projects undertaken for USD 1.6 bn, Haití
including USD 680 M in road infrastructure
 Housing Deficit: 30k housing units and ~ 800k1 in need of
improvements.
 Urban Non residential construction demand (offices)
Panama
 USD 5.2 bn Panama Canal expansion
 USD13.6bn infrastructure investment plan for 2010-2014:
Expected to include the 1st underground transportation
system in Central America and additional highways
 Residential deficit in 2012 of 125k residential units

Ongoing reconstruction in Haiti

Partially backed by the reconstruction fund set up by the
Haitian government, the UN, and the international community

Low income housing projects and infrastructure projects,
including:
 Expansion of Santo Domingo’s underground transit system
 Expansion of Bavaro-Miches road and Highway in
Santiago
Rest of  Tourism and related infrastructure investments in the Caribbean
Caribbean continue to rebound following the global economic crisis
Dominican
Republic
Source: Cementos Argos, INDESA, Contraloría General de la República de Panamá, and ADOCEM ¹ Estimates based on public information from maritime and customs agencies from the Caribbean
20
C&CA: markets continue showing positives dynamics
Region should benefit from remittances
coming from the USA recovery (Honduras
10% increase YTD June/15)
Important benefits in competitiveness
as all the countries in the division are
net importers of energetics
Panama
Ongoing construction works keep the market under
a positive performance
Sustained economic growth
GDP variation Y/Y
11.4
 USD 900 million under execution in several road projects
7.9
7.6
6.40
5.8
6.2
6.1
5.8
5.9
 3 hydropower plants under construction representing 15%
of total works in the country for 2015
 Social housing under construction
1Q2013
3Q2013
1Q2014
3Q2014
1Q2015
 Multiple canal side works, such as bridges, ports and
hotels
Honduras
Better economic performance in 2015
Government initiatives are boosting the sector
GDP variation Y/Y
4
3.3
2.8
3.2
3
2.7
3.6
2.6
 A recovery is expected in the residential and commercial
sectors by 2015/2016
1.7
1Q2013
21
2Q2013
3Q2013
 Increase in the budget execution of civil works led by the
public sector
4Q2014
1Q2014
2Q2014
Source: Co-alianza Honduras – Contraloría de Panama
3Q2014
4Q2014
1Q2015
 The government is promoting foreign direct investment to
boost the infrastructure sector
C&CA: Relevant projects under construction
Panama:
Honduras:
Major infrastructure projects continue in 2015
8 projects totaling US1,250 M lead the
infrastructure sector in 2015
US900Million
Allocated by the
government in 2015 for
the following works:





Metro Line 2: US$250M
Colon city renewal: US$110M
Airport expansion: US$198M
Roads and drains: US$240M
Basic Health and Drinking
Water: US$100M
Hydropower under
development
15% of the works in 2015
are coming from this sector
Hidroeléctrica Burica,
Chuspa, la Chuchilla, San
Bartolo
Multiple canal
side works
Social housing
under construction
Techos de esperanza:
“Ceilings of hope” Housing
Solutions to 20,000 families in
five years .
Colon city renewal: 5,000
homes
Third bridge over the canal
(under construction)
Hotels in the Pacific region
Three new ports over the Pacific
Co-alianza leads the awarding processes
through public private partnerships
 Construction of the International AirportPalmerola
 Construction of “Occidente” highway
 Re-construction of “Carretera del Sur”
highway
 Construction of “San Juan Celaque”
highway
Cement market reflects the good
momentum of the infrastructure sector
363k
396k
9%
03/2014
03/2015
Increase of cement volumes YTD - March
22
Source: Co-alianza Honduras – Contraloría de Panamá
Concrete placement in project “Reserva del Río”, Medellín, Colombia
Financial highlights
Consolidated financial highlights
Cement volume1 (mm MTPA)
8.9
2008
8.1
2009
7.8
2010
9.3
RMC volume (mm m³)
10.8
11.6
11.1
12.6
8.5
7.3
5.3
2011
2012
2013
2014
2008
1 Cement volume includes exports
Revenues (COP$ bn)
1,200
4,968
4,380
3,449
7.0
5.9
2010
2011
2012
2013
2014
EBITDA (COP$ bn)
5,803
3,805
2009
9.4
EBITDA
Margen EBITDA
978
1,000
3,668
791
800
3,023
600
591
539
19.7%
17.8%
18.6%
18.1%
18.3%
-
15.0%
2009
2010
2011
2012
2013
2014
2008
2009
2010
2011
2012
2013
2014
USD$ M 2,152
1,951
1,710
2,075
2,437
2,656
2,908
USD$ M 335
369
305
385
447
524
534
Source: Cementos Argos
20.0%
15.6%
2008
24
30.0%
25.0%
682
651
18.9%
400
200
1,060
Consolidated financial highlights (cont.)
Capex
Consolidated ratios
Neta Debt / (EBITDA + Dividends)
Strategic
Maintenance
EBITDA / Financial expenses
939
6.0x
505
491
2008
2009
2010
456
436
253
2011
3.7x
291
2.3x
2012
2013
2008
2014
3.6x
2.3x
2009
3.9x
4.2x
3.5x
3.7x
3.8x
3.0x
5.9x
3.8x
1.9x
2010
2011
2012
2013
2014
Dividends per ordinary share* (COP$)
Dividend Ordinary Share
350
1.7%
300
250
1.7%
1.5%
1.2%
1.2%
1.2%
112
121
126
132
1.5%
1.3%
200
150
Yield
1.8%
140
154
166
178
1.0%
100
0.5%
50
-
0.0%
2008
25
2009
2010
2011
2012
2013
2014
2015
Source: Cementos Argos
* 2015 Annual dividend based on proposal approved at 2015 General
Shareholders´Meeting;
Yield: Calculated as annual declared dividend / stock price at the end of the previous
year;
The dividend of the preferred share is COP 231 / share, as defined in the
prospectus of preferred shares issuance of May 2013.
According to this dividend and the value of the preferred share as of December
31, 2014 (COP $9.650 per preferred share), the Yield of this species is 2.4%
Facade of the Argos Innovation Center, simulating the pages of books
CONSOLIDATED RESULTS
2Q15
Consolidated volume
Cement*
Concrete
Ton 000
m3 000
11,051
12,559
5%
7%
2,782
3,207
29%
1H14
3,334
21%
14%
32%
3,001
6,843
4%
5%
6,018
30%
10%
3,605
1H15
11%
18%
2,740
3,238
22%
1H15
1%
2,923
15%
22%
Colombia
USA
7%
2,376
2,538
CCA
Exports
2014
1T
1Q
2015
2T
2Q
3T
3Q
4T
4Q
(*) Includes grey cement, oil-well cement, white cement and cementitious products
31%
27%
43%
2,892
20%
4%
5,462
5,268
4%
3,278
27
33%
1H14
-7%
-4%
2%
30%
43%
38%
Colombia
USA - Southeast
USA – South Central
CCA
2014
1Q
1T
2015
2T
2Q
3T
3Q
4T
4Q
2Q15: Strong quarter with profitability improvements
 Long term focus on profitability and strategic decisions drive return improvements:
 Organizational excellence program supports margin improvement, especially in the CCA regional division
 US recovery enhances EBITDA generation, despite adverse weather conditions
 Colombia continues to recover market share gearing up to the scheduled infrastructure developments
 Improvement in net margin reflects dilution of non operating items by stronger operational results
Revenues
EBITDA
Net Income
COP billion
COP billion
COP billion
1,044
276
255
-7%
6%
26% 3,479
517
371
256
46
21%
2,758
26%
18%
261
1,826
2014
1Q 1T
11%
1,305
27%
2014
1Q1T
1,653
3T3Q 4T 4Q
307
76
2015
2014
3T3Q 4T 4Q
1Q
1T
Net Margin
%
%
1Q
2Q
28
80%
EBITDA Margin
2015
2Q
2T
2T
2Q
Note: 1Q14, 2Q14 and 2015 figures under IFRS; all other figures in ColGAAP
2014
2015
20.0
17.6
211%
-40%
1,453
10%
142
122
75%
45%
-2%
3%
-7%
80
1,550
1,490
81%
31% 678
272
4%
221
74
5,797
3%
79
2015
2Q
2T
3T3Q 4T 4Q
2014
2015 Var (bps)
18.6
Var (bps)
-139
1Q
5.9
4.8
-108
20.3
267
2Q
3.1
7.8
464
Colombia: Market share recovery provides a positive outlook
for 2H15
 Cement: Growing above market (10.3% 2Q15 vs. 5.6% 2Q15 industry)
 RMX: 5% growth in the quarter with a more profitable segment
 Positive outlook for 2H15
Cement*
Concrete
Ton 000
m3 000
5,537
3,453
1,498
828
1%
-8%
1,486
903
14%
2,918
4% 1,722
2,552
14%
1,301
10%
866
-3%
19%
1,705
1,434
4%
1,252
-1%
1,484
909
5%
1%
856
14%
796
-7%
2014
1Q
29
1T
2015
2Q2T
3Q
3T
4Q
4T
(*) Includes grey cement, oil-well cement, white cement and cementitious products
2014
1Q
1T 2Q 2T 3Q3T
2015
4T
4Q
Colombia: Ready to seize future dynamics with higher
profitability
 Revenue growth reflects the improved competitive dynamics and market share recovery
 EBITDA starts showing improvement during the quarter supported on:
 Successful marketing strategies
 Logistic cost reduction with lower clinker transfers between plants (effect of Dispatch Center in Cartagena
and the introduction of positive effects of Rio Claro expansion)
 Volume growth
 FX appreciation
 EBITDA margin impacted by additional costs from the stabilization and halt of the Rio Claro kiln (45 days) and 26
days maintenance in Cartagena (representing ~130 bps)
Revenues
EBITDA
EBITDA Margin
COP$ Billion
COP$ Billion
%
778
2,403
172
621
-8%
2015
186
4%
13%
1%
1,184
1,336
3%
14%
3%
1%
658
590
420
9%
-24%
30
198
28
3%
31
2014
2015
3T
3Q
4T4Q
Note: 2015 figures under IFRS; 2014 figures under ColGAAP
35%
31
238
192
-19.6%
2014
2T
2Q
29
389
-6%
11%
1Q 1T
-7%
181
678
593
29%
29
598
2014
1T
1Q
40
2015
2T
2Q
3T3Q 4T 4Q
1Q
4T
2Q
3T
3Q
2T
4Q
1T
Regional USA: Healthy growth even with adverse weather
Cement
Cement
Concrete
Ton 000
m3 000
 +12% y-o-y in 2Q15 vs. +4% market
growth in Argos’s states*
 Deep south leads the growth,
especially GA
2,799
 Increasing market share in some
states and products
7,081
727
1,844
RMX
-10%
-6%
806
-1%
 Inclement weather affected volumes
1,956
22% 1,545
8%
1,266
3%
 Rainfall during the quarter 50%
above average in 121 years of
record
3,540
3,281
910
12%
1%
1,899
811
1,910
43%
455
635
39%
2014
1Q
1T
31
17%
37%
78%
2015
2T2Q 3T 3Q 4T
4Q
18%
1,382
2014
1Q
1T
1,631
2015
2Q
2T
3T 3Q 4T
4Q
 Backlog increase drives positive
outlook for 2H15
 5% increase in TX
 Florida’s increased 107% (I-4
Highway and “The People Mover”
at Tampa International Airport
awarded to Argos)
(*) Source: USGS; Argos’s states include shipments in : Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Texas
Regional USA: Margin improvement reflects US recovery
 Revenues reflecting positive performance across all regions despite weather conditions
 Results from Florida now comparable to 2Q14
 Cement imports to Houston and Mobile ports reached 214k tons as of 2Q15
 Record EBITDA since the crisis
 EBITDA margin demonstrates pace of recovery and impact on operational leverage
Revenues
EBITDA
EBITDA Margin
USD$ Million
USD$ Million
%
1,092
68.2
288
2015
15.8
-7%
89% 48.8
-40%
496
26.5
321
2014
8.1
146%
24.0
31%
202
32
1T
2Q 2T 3Q3T
0.9
5.2%
264
14.1
1210%
2014
3%
8.6
44%
22%
46%
5.5
34.7
10% 25.9
9%
295
1Q
8.3%
5.4
18% 585
308
4%
10.8
2015
4T
4Q
Note: 2015 figures under IFRS; 2014 figures under ColGAAP
671%
1.8
2014
1Q
1T 2Q2T
1Q4T
2015
3T
3Q
4T 4Q
2Q
3T
2T3Q 1T
4Q
Caribbean and Central America: Honduras leads profitable
growth
Cement
Cement
Concrete
Ton 000
m3 000
 24% growth driven mainly by:
 Market share gains in the
Honduran market
 Positive performance in trading
 Consolidation of Puerto Rico
3,251
516
748
110
-5%
-22%
788
-12%
20% 2,055
1,716
12%
1,104
890
 Panama: Starting new projects
expected to drive demand in 2H15:
-18%
217
16%
-17%
 Dream Plaza, Marea II and Time
Square (more than 33,000 m3)
105
-9%
-7%
826
951
15%
2014
1Q
1Q
1T
33
265
126
24%
8%
RMX
141
2015
2Q
3Q
2T2Q 3T 3Q 4T
4Q4Q
139
-19%
2014
1T1Q1Q2T 2Q2Q
3T
112
2015
3Q
3Q
4T
4Q
4Q
Caribbean and Central America: Structural improvement in
margin driven by organizational excellence program
 Operational excellence program coupled with strategic geographical configuration lead to a more profitable
Regional Division:
 Honduras and Panama EBITDA margin increased over 600 bps during 2Q15
 10% decrease in costs on a consolidated basis for the Regional Division
 3% production cost decrease in Honduras
 Use of alternative fuels in Honduras reached 25.5%, increasing 17% vs. 2Q14
 Operational efficiencies in Panama (3% decrease clinker/cement ratio, 5% decrease energy consumption)
Revenues
EBITDA
EBITDA Margin
USD$ Million
USD$ Million
%
165
543
42
127
-10%
0%
-4%
141
44
15%
276 -1%
141
273
5%
138
-2%
2015
35
79
32
42
3%
4%
91
14%
48
33
11%
13%
33.2%
3%
31
0%
135
134
37
2015
2014
15%
43
2014
30
28
2014
1Q
1T
34
2Q
2T
3T
3Q
4T
4Q
Note: 2015 figures under IFRS; 2014 figures under ColGAAP
1Q
1T
2015
2Q 3T 3Q4T
2T
4Q
1Q
4T 2Q3T
3Q
2T
1T4Q
28.7%
Newberry Plant, Florida
FINANCIAL SITUATION
COP Trillion
Strong balance sheet to maximize growth opportunities
18.0
Assets
Current
16.0
20%
Deferred and intangible
15%
14.0
11%
PP&E
Permanent investments
12.0
7.8
54%
10.0
8.0
$ 15.2 trillion*
15.2
6.0
Bonds
Liabilities
LT financial obligations
4.0
7.5
13%
10%
Other LT
2.0
20%
27%
0.0
Assets
Assets
ST financial obligations
Other ST
Liab. & Equity
Shareholders' Equity
Liabilities
30%
$ 7.8 trillion
Figures as of June 30th, 2015
36
* For the purposes of this presentation 1 billion = 1,000,000,000 and 1 trillion = 1,000,000,000,000
Adequate indebtedness level and profile
Debt as of June 30th, 2015
Total gross debt = USD 1,957 million
18%
Net Debt
42%
LT
COP
ST
USD
58%
EBITDA +
Dividends
= 3.53x
82%
42%
58%
COP 2,101
billion
USD 1,141
million
EBITDA
Financial expenses
= 4.52x
Consolidated cost of debt
7.0%
7.1%
7.3%
7.3%
7.4%
7.7%
3.0%
3.0%
3.0%
3.0%
2.9%
3.0%
8.1%
8.4%
8.3%
8.7%
9.0%
7.8%
3.0%
3.0%
2.9%
2.8%
2.5%
2.5%
COP
37
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Net Debt
USD
* Note: For ratio Net debt to EBITDA + Dividends, Net debt and EBITDA are calculated with the same FX rate (since 1Q15)
Shareholder’
equity
= 62.60%
Adequate indebtedness level and profile (cont.)
Debt as of June 30th, 2015
Short-term:
USD$ 354 million
120
1
100
80
60
40
1
1
109
1
65
1
61
20
1
2
Oct-15
0
Jul-15
Aug-15
31
Sep-15
1
8
Nov-15
Bank Loans
Dec-15
Bonds
1
Jan-16
1
15
Feb-16
44
1
Mar-16
Apr-16
1
May-16
1
8
Jun-16
Infraestructure leasing
Long-term:
USD$ 1,603 million
450
8
27
8
322
303
300
8
150
4
0
215
10
8
38
46
22
38
22
2016
2017
2018
9
2019
2020
2021
Bank Loans
38
163
116
2022
Bonds
2023
2024
Infraestructure leasing
121
117
2025
2026
2027
2028
2029
Consolidated cash flow
COP Billion – as June 30th, 2015
Cash Flow
at Jan. 2015
533
Cash flow (COP Mill)
EBITDA
+ 678
Net Op.
Working Capital
- 84
Maintenance
CAPEX
- 147
Strategic
CAPEX
- 136
EBITDA
677,733
(+) Working Capital Var.
(83,851)
(-) Maintenance Capex
146,961
(-) Strategic Capex
135,891
166,091
144,940
(-) Taxes
Total Free Cash Flow
Financial Cash Flow
Taxes
- 166
(+) Financial Contribution
(-) Net Dividends
Net Financial
Expenses
- 150
(+) Net Other Operating
(+) Net Financial Op.
Net
Dividends
- 149
(+) Capitalization
(+) Acquisitions
Net Other
Non-Operating
+6
Net Financial
Op.
- 24
Acquisitions
- 28
(+) Divestitures
(+) Exchange rate effect
Exchange rate effect
+6
Cash Flow
at June 2015
337
0
500 1000 1500 2000 2500 3000
(150,450)
(148,646)
5,500
(22,396)
(1,654)
(28,293)
(492)
Total Financial Cash Flow
(346,431)
Total Cash Flow for the Period
(201,491)
(+) Initial Cash Flow
(+) Exchange rate effect
39
Total
Final Cash Flow
532,838
6,103
337,449
 Exchange rate effect of COP 50 billion in NWK
Investment portfolio improves the company´s financial
flexibility
% Stake
Company
Price per Share
Value
Value
(COP)
(COP$ million)* (US$ million)*
Grupo Suramericana
6.0%
37,020
1,043,344
404
Bancolombia
4.0%
26,700
545,672
211
Cartón Colombia
2.1%
4,950
Total
0.7%
34.1%
Grupo Sura
Bancolombia
Cartón Colombia
65.2%
11,429
4
1,600,445
619
* FX Rate as of June 30th, 2015: COP 2,585.11 / USD
Ordinary Share
of Argos
CEMARGOS
Preferred Share
of Argos
PFCEMARGOS
12,000
11,000
Price (COP)
11,000
10,000
9,000
9,250
7,000
9,000
-8.1%
-9.3%
8,000
% YTD – June/2015
5,000
7,000
Vs.
-12.0% of the Colcap
3,000
1,000
05/11
40
09/11
01/12
05/12
09/12
01/13
05/13
09/13
01/14
05/14
09/14
8,870
% YTD – June/2015
+15.2% since issuance (May 2013)
7,700
6,000
01/15
05/15
5,000
05/13
07/13
09/13
11/13
01/14
03/14
05/14
07/14
09/14
10/14
12/14
02/15
04/15
06/15
Ready-mix plant, Argos Panamá
APPENDIX
SUMMARY PER REGIONAL DIVISION / OTHER BUSINESSES/
OPERATING PROFIT AND EBITDA (IN COP AND USD) / EXPORTS
Appendix
Summary per regional division / other businesses
Revenues
EBITDA
COP$ billion
2015
2014
Var (%)
2015
Mgn (%)
2014
Mgn (%)
Var (%)
Colombia
1,336
1,221
9.5
389
29.1
407
33.3
-4.3
USA
1,452
973
49.3
121
8.3
39
4.0
208.6
677
540
25.4
225
33.3
156
28.9
44.1
Subtotal
3,466
2,733
26.8
736
21.2
602
22.0
22.1
Corporate
-2
-4
N/A
-61
N/A
-85
N/A
N/A
Other Businesses
15
28
-45.7
3
21.9
13
47.6
-75.0
Florida closing expenses
N/A
N/A
N/A
0
N/A
-14
N/A
N/A
3,479
2,758
26.2
678
19.5
517
18.7
31.2
Colombia
538
622
-13.5
157
29.1
207
33.3
-24.4
USA
585
496
17.9
49
8.3
20
4.0
143.8
Caribbean & CA
273
275
-0.9
91
33.2
80
28.9
13.8
5
12
-56.0
-23
-430.5
-37
-302.0
-37.3
N/A
N/A
N/A
0
N/A
-7
N/A
-100.0
1,401
1,406
-0.3
273
19.5
263
18.7
3.6
Caribbean & CA
Consolidated Result
US$ million
Corp. & other buss
Florida closing expenses
Consolidated Result US$
42
Note: All figures under IFRS
Appendix
Operating profit and EBITDA (COP and USD)
2Q
COP
Billion
2015
2014
YTD
Var (%)
2015
2014
Var (%)
Ingresos
Revenues
1,826
1,453
26
3,479
2,758
26
Costos y gastos
Costs and expenses
1,584
1,305
21
3,072
2,457
25
Ut.
Operacional
Operating
profit
242
148
64
407
301
36
EBITDA
EBITDA
371
256
45
678
517
31
20.3%
17.6%
Ingresos
Revenues
732
754
(3)
1,401
1,406
(0)
Costos
y gastos
Costs and
expenses
635
677
(6)
1,237
1,253
(1)
97
77
27
164
153
7
149
133
12
273
263
4
20.3%
17.6%
EBITDAEBITDA
margin%(%)
Margen
19.5%
18.7%
USD
million
Ut.
Operacional
Operating
profit
EBITDA
EBITDA
EBITDA margin (%)
Margen EBITDA %
43
Note: Figures under IFRS
19.5%
18.7%
Appendix
Exports
Cement and clinker
971
234
-8%
254
-100%
483
-33%
325
277
-43%
157
-6%
-6%
207
-19%
2014
1Q
1T
44
168
2015
2Q
2T
3Q
3T
4T4Q
Colombia: Growth potential with improving
fundamentals
COP Trillion *
Total and construction GDP
600.0
500.0
400.0
308
325
340
297
5.0%
5.2%
5.4%
5.6%
290
300.0
4.5%
200.0
388
402
5.9%
6.2%
453
425
408
491
471
514
532
552
14.0%
12.0%
10.0%
6.4% 6.19% 6.39% 6.36% 6.47% 6.80% 6.84% 6.84%
8.0%
6.0%
4.0%
100.0
40.9
44.4
13.1
14.8
16.0
17.7
18.9
23.0
25.0
26.3
26.3
28.9
30.0
31.8
34.9
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 2015E 2016E
2.0%
-
0.0%
Construction GDP
GDP
Construction GDP / GDP
* 1 trillion (Tn) = 1,000,000,000,000
Baa2/BBB/BBB**
4.6%
Investment grade
since 2011
2015E – 3.5%
48
M
inhabitants
GDP 2014
8%
Population
growth
** Rating Colombia: Moody´s / S&P / Fitch
2013
2020
Colombia’s cement consumption per capita is low and leaves room for growth
Latin America cement consumption per capita - 2012 (Kg / capita)
660
390
Pan ama
Ecuado r
316
Mexico
Source: Cementos Argos’ estimates
45
278
Ven ezu ela
271
Bra zil
267
Costa Rica
248
Per u
245
Pue rto
Rico
245
Chile
229
Arg entina
227
Boli via
225
Colombia
213
205
205
200
Hondu ras Gua temala El Salvado r Urugua y
135
105
Par aguay Nica ragua
Competitive Advantages: Vertically integrated operations
optimizes flexibility, stability and profitability
Sourcing
Limestone / clay
Colombia

40 years of proven and
probable reserves
USA
Panama and the Caribbean & CA


75 years of proven
and probable reserves
570 years of proven and probable reserves
Panama
Clinker (for grinding units
only)
N/A

N/A
42% from own
plants
Aggregates (for RMC
operations)



49% from own quarries
Cement for our RMC
operations
100% from own plants
Electricity
89% generation from own
sources
Fuel / Alternative fuels
Transport via shipping and
trading
46
Source: Cementos Argos

From 3rd parties
Rest of the Caribbean

From own plants,
trading network, 3rd
parties
Panama
Rest of the Caribbean
35% from own plants
From 3rd parties


From own plants in SE
100% from own plants
From 3rd parties
From 3rd parties + own backup generation
From 3rd parties
 Fleet of vessels for trading and raw materials flow
 Largest logistic network in Colombia
 Terminals and rail road network in the US
CONTACT
INFORMATION
CARLOS YUSTY
CFO
[email protected]
GUSTAVO URIBE
IRO
[email protected]
www.argos.co/ir
This recognition, called Reconocimiento Emisores – IR
is given by the Colombian Stock Exchange, Bolsa de
Valores de Colombia S.A. It is not a recognition that
certifies the quality of registered stock , nor does it
guarantee the solvency of the issuer.