Loma Negra's Prices Are Rising, But Falling Volumes Are the Real Warning

Loma Negra's Q2 looks better on price than on demand

The core message in Loma Negra's quarter is straightforward: prices did some of the heavy lifting while demand still has not fully recovered. Yesterday's 2Q26 earnings release and today's 2Q26 earnings call leave investors with a simple question: is this a healthy rerating, or a quarter that looks good even though underlying demand is still subdued?

In the first quarter, the market had reason to be optimistic. Loma Negra posted EPS of $0.1803 versus a $0.0529 forecast and revenue of $133.59 million versus $98.67 million expected, and the stock rose 6.41% after hours. That reaction was understandable. But another beat is not enough on its own; the more important question is what kind of sales are driving the numbers now.

In 2Q26, net sales revenue rose 2.1% year over year to Ps. 238,053 million (US$166 million). At the same time, consolidated adjusted EBITDA fell 2.5% in pesos and the EBITDA margin slipped to 20.2% from 21.2%. That combination suggests price helped top-line growth, but not cleanly enough to lift profits at the same pace.

Management was direct about demand. Industry volumes, he said, have not yet regained the momentum the company had expected, with a weak April, impacted by heavy rains followed by May and June trends more in line with a year earlier. That does not prove the recovery is broken, but it does argue for caution.

Olavarría kiln shutdown and clinker stock point to a softer operating picture

One operational detail matters more than another clean-looking income statement: if demand were truly firm, the case for shutting down a major kiln for this long would be harder to explain.

What the Olavarría shutdown signals

The clearest sign is that the main kiln in Olavarría will shut until November 2026. In a business responding to strong customer demand, management is usually trying to protect service levels or keep output flexible, not take the main kiln offline for six months.

Loma Negra described the move as a response to high gas costs and excess clinker stock built up during summer overproduction. That is a plausible cost-control and inventory-management decision. By itself, though, it is not proof that end demand has fully come back.

Why inventory can make the sales tape look better than it is

The industry did get a March bump, but then cemento, sin embargo, cayó en abril hurt the flow of product. Combined with management's comment that May and June trends were closer to a year earlier, that looks less like a market surging ahead than like a short rebound followed by a flat read-through.

Loma Negra also says more than 700,000 tonnes of clinker are being stored outside silos. That large buffer can help explain why the company could still support prices and keep revenue growing modestly even while the underlying volume pattern remained shaky.

The broader point is simple: net sales revenue increased by 2.1% while consolidated adjusted EBITDA decreased by 2.5% and the EBITDA margin fell to 20.2%. Price can support the top line for a while, but if volumes stay soft and inventory remains elevated, margin expansion is harder to sustain.

The real debate: customer pull, or price and inventory timing?

Bulls can argue the kiln shutdown is just disciplined housekeeping and that the clinker buffer will let the plant return to normal without a supply squeeze if construction demand improves.

Skeptics will argue the opposite: if demand were truly firm, management would be focused on serving it, not pausing production because energy costs are high and stock levels are already elevated.

That is the real question here. Loma Negra clearly makes a usable product, and the company has more than 90 years of experience and broad recognition in Argentina. What investors are really weighing is whether recent sales strength reflects durable customer demand or a mix of pricing, inventory timing, and favorable setup.

What would make the turnaround story more credible

The quarter did not break the turnaround case, but it did turn this into a verify-first story.

Why the setup deserves close watching

Loma Negra just reported 2Q26 results after the market absorbed a strong 1Q26 beat, when EPS reached $0.1803 versus a $0.0529 forecast. That sequence can create its own momentum. But the numbers still argue for patience rather than full confidence.

The balance sheet helps explain why. Loma Negra ended the quarter with Net Debt/LTM Adjusted EBITDA of 1.30x, a little better than 1.33x in 1Q26, and net profit benefited from a lower total net financial cost. That gives the company room to maneuver. It does not yet prove that demand is strong enough to trust the story.

What investors should watch next

The next reports need to show that growth is being pulled by construction demand, not mainly pushed by price, mix, or inventory drawdown. The most useful signals are:

• steadier industry volumes across quarters, not just a March rebound
• EBITDA and margin trends that improve alongside revenue
• signs that clinker and finished-goods flows are tightening as demand absorbs inventory
• evidence that normal maintenance timing is driven by operations rather than by weak demand and high stocks

If the quarter starts to show that combination, the bullish case gets stronger. If volumes stay soft, margins compress again, and inventory remains a central part of the story, the recovery narrative will still need more proof.