Loma Negra Compania Industrial Argentina SA
LOMA Details
Lomo Negra Compania Industrial Argentina SA (NYSE: LOMA) is a leading manufacturer and distributor of cement in Argentina. The company also manufactures masonry cement, aggregates, concrete, and lime products used in private and public construction activities. As of December 31, 2020, LOMA held a market share of 43.80% in terms of sales volume in Argentina. The company is strongly supported by its huge limestone reserves, strategically located plant, and well-established supply lines. The company has a total limestone reserve of approximately 1,107 million tons, which are estimated to last 158 years at the FY20 consumption rate. Each of the company’s American Depositary Shares (ADS) represents 5 common shares. As of June 09, 2021, the company’s market capitalization stood at USD 1.51 billion.
Share Repurchase Program: On February 12, 2021, the company announced the share repurchase program effective February 18, 2021.
Buyback Summary (Source: Form 6-K, May 12, 2021)
Robust Q1FY21 Results: The company reported a 35.35% increase in net revenues to ARS 13,175 million in Q1FY21 (ending March 31, 2021) compared to ARS 9,734 million in Q1FY20. In addition, the company reported a massive upsurge of 104.45% in net income to ARS 2,568 million in Q1FY21 than ARS 1,256 million in Q1FY20. As of March 31, 2020, the company stood with total debt of ARS 7,241 million along with cash and short-term investments of ARS 6,048 million. During the Q1FY21, the company made the capital expenditure of ARS 1,022 million for the expansion of the production capacity of the L’Amalí plant.
Sales Volume and Revenues by Segment (Source: Earnings Presentation, Q1FY21)
Key Risks: Argentina’s economy has faced extreme volatility in the recent decades, with high inflations, devaluation of the Argentine Peso against the U.S. dollar, and unequal periods of economic growth. Therefore, the company’s operations may be affected by the economic and political events that might affect the Argentine economy. In addition, the Argentine Peso depreciated by 59.02% and 40.49% against the USD in 2019 and 2020, respectively. The Argentine economy and the company’s business could be severely impacted if the significant depreciation of the Peso continues.
Outlook: The company expects the cement demand to stabilize around pre-pandemic levels in 2021. L’Amali plant will be commissioned fully in the second half upon completion of its expansion.
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