Votorantim Cimentos Reverses Loss and Posts Net Profit of R$ 134 million in the Second Quarter of 2019

Votorantim Cimentos had a global net profit of R$ 134 million in the second quarter of 2019, reversing a loss of R$ 2.2 million in the same period last year. The Brazilian operation also returned to profitability in the quarter, posting a net profit of R$ 120.8 million, compared to a loss of R$ 26.7 million in 2Q18. The company had a 2% growth in global net revenue in the second quarter of 2019 compared to the second quarter of 2018, totaling R$ 3.3 billion. In Brazil, the company maintained a positive price dynamic in the second quarter, reaching net revenue of R$ 1.7 billion, a 4% growth over the same period last year. In North America, Votorantim Cimentos operations in the United States achieved positive results, with sales and price increases, driven in part by the end of the effect of a harsh winter in May and a 9% depreciation of the Brazilian real against the dollar. The company's leverage, as measured by the net debt/adjusted EBITDA ratio, was 3.2x, remaining relatively stable compared to the first quarter of 2019.

Votorantim Cimentos' consolidated adjusted EBITDA reached R$ 491 million in 2Q19, a 21% decrease compared to the same period of 2018, with an EBITDA margin of 15%. The most significant results were from the North American operations, with an adjusted EBITDA of R$ 291 million, up 14% over the same period last year. In Brazil, EBITDA dropped 61% in the second quarter of 2019 to R$ 76 million, mainly due to non-recurring items recorded in the second quarter of 2018 and an increase in variable costs.

"In the first half of the year, we achieved net revenue growth and stability in our leverage, even though the Brazilian economy has not yet achieved the anticipated recovery and despite the impact of an atypical seasonality in North America. In this second quarter, we followed our investment plan and inaugurated a new production line of mortar, in Cuiabá, and one of agricultural solutions, in Nobres, both in the Brazilian state of Mato Grosso," said Osvaldo Ayres Filho, Global CFO of Votorantim Cimentos.

In North America, net revenue reached R$ 1.05 billion in the second quarter, a 15% increase over the previous year, and was mainly impacted by the end of winter in April and the depreciation of the Brazilian real. This quarter also incorporated the results of United Materials, a company that operates in the concrete, aggregates (sand, stone and gravel) and building materials segments in the western New York state, in the United States, whose purchase was completed in March.

In Europe, Africa and Asia, net revenue was R$ 431 million, down 17% from the second 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 dropped 21% to R$ 101 million.

In Latin America, net revenue was R$ 154 million in 2Q19, down 13% compared to the same period last year. Worth mentioning were the positive results in Bolivia, with increased sales volume and stable prices. Adjusted EBITDA in the region was R$ 29 million, down 37%, especially due to the favorable non-recurring market scenario in Uruguay in 2018.

In substitution of the available US$ 230 million committed credit facility (CCF), due in 2020, Votorantim Cimentos contracted from a banking syndicate a new CCF in the amount of US$ 290 million, maturing in August 2024. The new credit line also comes with provisions linked to the performance of sustainability indicators, in line with Votorantim Cimentos' commitment and strategy. This CCF is among the pioneer operations of its kind in the global construction materials industry

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