- Global net revenue was R$5.8 billion, a 50% growth compared to 2Q2020.
- Adjusted EBITDA was R$1.5 billion, an increase of 110% over the same period last year.
- EBITDA margin reached 27% in the period, an increase of 8 p.p. over 2Q20.
- Leverage, measured by the net debt/EBITDA ratio, was 1.58x, down 0.38x compared to the end of 2020, in line with the company's financial policy.
- The international presence in mature markets was strengthened by the acquisition of the aggregates company Valley View Industries (USA) and Cementos Balboa (Spain), the total control of the concrete company Superior Materials (USA), and the conclusion of the transaction and start of joint operations with McInnis Cement (Canada and USA).
Votorantim Cimentos posted net income of R$ 692 million in the second quarter of 2021, reversing the R$ 153-million loss in the same period last year. The company's global net revenue in 2Q21 was R$ 5.8 billion, an increase of 50% compared to 2Q20, as a result of an increase in sales volume and favorable price dynamics in all regions where it operates.
The second quarter of 2021 was marked by sales growth in several markets where Votorantim Cimentos operates. The company's global cement sales totaled 9.8 million tonnes in 2Q21, 31% more than the 7.5 million tonnes sold in 2Q20. In addition to the economic recovery in some countries and growth in sectors such as civil construction and infrastructure, it is important to note that 2Q20 represented a low basis for comparison, as a result of the measures to restrict operations and movement of people in several countries in the second quarter of last year, after the World Health Organization (WHO) declared the COVID-19 pandemic.
"Over the last few months, we've seen important advances in COVID-19 vaccination around the world and the beginning of a global economic recovery. Our results in the quarter reflect our operational leverage, in line with our long-term strategy. And we continue to reinforce the need to keep our guard up in relation to the coronavirus and to ensure the health and safety of people, inside and outside our sites," said Marcelo Castelli, Global CEO of Votorantim Cimentos.
Votorantim Cimentos ended the second quarter with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of R$ 1.5 billion, up 110% over the same period last year, and an EBITDA margin of 27%, an increase of eight percentage points over 2Q20. These numbers are the result of the company's positive sales volume and operational excellence. Leverage, measured by the net debt/adjusted EBITDA ratio, was 1.58x, down 0.38x compared to December 2020, in line with the company's financial policy.
"We have continued to reduce our leverage since the end of last year and this quarter's number is another positive milestone in our path of financial discipline, and already includes the business combination with McInnis Cement. As a result, in June, Moody's assigned an investment grade rating to Votorantim Cimentos on a global scale, making us part of a select group of Brazilian companies with an investment grade rating by the three main global risk rating agencies," said Osvaldo Ayres Filho, Global CFO of Votorantim Cimentos.
Recent moves by the company have strengthened its participation in relevant markets. In North America, in early August, Votorantim Cimentos assumed full control of the joint venture with Superior Materials in Detroit, Michigan (USA). Through this transaction, VC is expanding its participation in the concrete market to serve customers located in the main cities within the Great Lakes Region. Superior Materials was founded in 1999 and the joint venture with Votorantim Cimentos was formed in 2010. With a strong market presence in metropolitan Detroit, the company has 11 concrete plants, two mobile plants and a fleet of 170 trucks, and will continue to use the Superior Materials brand, which is well known in the local market.
In July, Prairie Materials, the concrete and aggregates division of Votorantim Cimentos in the United States, entered into an agreement to acquire Valley View Industries, an aggregates company based in Illinois, in the Midwest of the United States. This transaction will enable Votorantim Cimentos to increase its capacity to supply aggregates to customers in the construction and agriculture sectors in Illinois.
Also in July, Votorantim Cimentos started operating a new production line at its plant in the Pecém Industrial and Port Complex, in Ceará, Brazil. With this expansion, the site now has a production capacity of 1 million tonnes of cement/year. The volume produced in the new site will enhance the supply of the metropolitan area of Fortaleza. Votorantim Cimentos invested approximately R$ 200 million in the project, which prioritized energy efficiency and industrial automation by incorporating state-of-the-art equipment, in line with the company's sustainability strategy. The cement production process in the new Pecém site will emit less than 60% of CO2 per tonne compared to the previous manufacturing process.
At the end of June, Votorantim Cimentos, through its Spanish subsidiary Corporación Noroeste, signed an agreement for the full acquisition of Cementos Balboa, in Spain. Cementos Balboa has a modern integrated cement plant located in Alconera, in the province of Badajoz, in the region of Extremadura, Southwest Spain, with an installed production capacity of 1.6 million tonnes of cement per year. The transaction is subject to customary closing conditions, including approval by Spanish regulatory authorities. The two companies will continue to operate as separate businesses pending the closing of the transaction.
In April of this year, Votorantim Cimentos and Caisse de dépot et placement du Québec (CDPQ), a long-term institutional investor, announced the completion of the transaction to combine their cement operations in North America, significantly strengthening their position in Canada and in the United States by increasing cement production capacity and operational efficiencies and expanding their distribution network. Since May, the operation of McInnis Cement Inc. has been integrated with Votorantim Cimentos' operations in North America.
Another highlight in the quarter was the contribution of R$ 100 million to Juntos Somos Mais made in April by the shareholders Votorantim Cimentos, Gerdau and Tigre. Created by Votorantim Cimentos in 2014, Juntos Somos Mais is a company that maintains the largest loyalty program in the building materials retail market and the largest marketplace in the sector, with more than 25 construction and service companies and 500,000 members (store owners, sales professionals and construction workers). The capital increase will support the vast potential for technological and digital solutions in the building materials sector. Juntos Somos Mais has a service marketplace, Triider, which acquired the Brazilian operation of Habitíssimo. With this acquisition, Triider became the largest marketplace in Brazil exclusively focused on construction materials, with the goal of transforming the renovation and construction experience.
"All these moves strengthen our presence in strategic countries and markets, as we diversify risks and pursue sustainable growth for our business," said Ayres Filho.
Performance by region – In Brazil, Votorantim Cimentos' net revenue in the quarter was R$2.6 billion, a 46% increase compared to the second quarter of 2020. Adjusted EBITDA was R$ 659 million, an increase of 167% in comparison to 2Q20, with an EBITDA margin of 26%. The positive results in the second quarter of 2021 are mainly due to a growth in sales volume and prices, as well as continued positive market dynamics in all regions of the country. The National Cement Association (SNIC) updated the industry's growth forecast to 6% in 2021. The main performance drivers in Brazil were the growth of the real estate sector, the maintenance of civil construction as an essential activity and the continuous advance of self-construction.
In North America, the company's net revenue was R$1.9 billion in the second quarter of 2021, an increase of 32% compared to the same period last year, primarily due to higher sales volume, especially in Canada, and the incorporation of McInnis Cement volumes starting in May, as well as price dynamics in the local market. Adjusted EBITDA in the quarter was R$ 598 million, compared to R $387 million in 2Q20—a 54% increase.
In Europe, Africa and Asia, Votorantim Cimentos' net revenue increased by 112% compared to 2Q20, reaching R$ 1.1 billion. Adjusted EBITDA in the second quarter increased by 163% compared to 2Q20, totaling R$ 194 million. The positive results were primarily due to a higher demand in all countries, especially in Turkey, compared to the same period last year, when the region was impacted by COVID-19 restrictions, in addition to positive price dynamics.
In Latin America, the company's net revenue in the second quarter was R$ 198 million, a 63% increase compared to 2Q20. Adjusted EBITDA, on the other hand, was R$ 92 million, up 240% compared to the second quarter of 2020. The results were due to good sales volume and price dynamics, especially in Bolivia, which had been impacted by COVID-19 restrictions in 2Q20.