Third quarter results 2019

Votorantim Cimentos posted a global net profit of R$ 285 million in the third quarter of 2019, an increase of 8% over the same period last year. The company's global net revenue grew 2% in this third quarter compared to the same period last year, totaling R$ 3.8 billion.

Positive global results in net revenues were driven by the Brazilian and North American operations. In Brazil, the company recorded an increase in sales volume, achieving net revenue of R$ 1.9 billion, up 5% over the same period of 2018. In North America, net revenue reached R$ 1.3 billion—an increase of 6% over the third quarter of 2018—and was positively impacted by U.S. operations, which recorded an increase in sales volume and price.

Votorantim Cimentos' consolidated adjusted EBITDA reached R$ 790 million in 3Q19, down 5% compared to the same period of 2018, with an EBITDA margin of 21%. The most significant results were from the North American operations, with an adjusted EBITDA of R$ 497 million, up 13% over the same period last year. In Brazil, EBITDA dropped 30% in the third quarter of 2019 to R$ 169 million, mainly due to higher freight and energy costs and non-recurring effects in the third quarter of 2018.

In Europe, Africa and Asia, net revenue was R$ 450 million, down 13% from the third quarter of 2018, mainly due to market conditions in Turkey, which has been experiencing an economic recession since the second half of 2018. Adjusted EBITDA in the region declined 10% to R$ 97 million.

In Latin America, net revenue was R$ 148 million in 3Q19, down 20% compared to the same period last year. Adjusted EBITDA in the region in the third quarter of 2019 was R$ 27 million, down 36% due to the Uruguay operation, where the favorable local dynamic experienced in the third quarter of 2018 is not recurring this year.

The company's global leverage, as measured by net debt/adjusted EBITDA ratio, was 3.2x, remaining stable compared to the second quarter of 2019 due to strong cash generation in the quarter, which offset the currency devaluation of our debt.

"We've maintained our financial discipline, without compromising the structuring work streams to increase our competitiveness. We are finalizing an investment cycle in expansions by increasing cement production at the San Luis plant in Argentina by 700,000 tons. We have approved a R$ 2 billion increase in our investment plan in competitiveness over the next five years," said Osvaldo Ayres Filho, Votorantim Cimentos' global CFO.

Ayres Filho also highlighted the diversification of Votorantim Cimentos' operations, with the growth of adjacent businesses. A major breakthrough in the third quarter was the launch of Verdera, the company's new co-processing unit brand, which offers waste management solutions for business and industrial customers.