Loma Negra Reports Falling Volumes and Margin Squeeze in Q2 2025

Loma Negra, a NYSE-listed company, reported 2Q25 results with falling sequential volumes and suffering margins. The company experienced challenging dynamics around pricing and volumes, similar to its 4Q24 results. Loma Negra's latest earnings highlight the ongoing difficulties in the market, with the company struggling to maintain its market position.

Loma Negra, a NYSE-listed company, reported its 2Q25 results, revealing continued struggles with pricing and volumes. The company's latest earnings reflect the ongoing market difficulties, with sequential volumes falling and margins suffering.

The company's 2Q25 results indicate a challenging dynamic in pricing and volumes, mirroring the trends seen in its 4Q24 results. Despite reporting a 11% year-over-year (YoY) increase in volumes, this figure is misleading as it follows a 32% decline in the year-ago quarter. Sequentially, volumes were flat, and pricing was weak, leading to a significant drop in gross profits and EBITDA. Gross profits and EBITDA were down 30% in inflation-adjusted and dollar-based figures, respectively [1].

The company's pricing capacity remains low due to low demand, further exacerbating its profitability issues. Inflation-adjusted revenues decreased by 8%, despite a 11% YoY increase in volumes. This was evident when comparing revenues per ton between 4Q24 (AR$129 thousand per ton) and 2Q25 (AR$142 thousand per ton), showing a mere 10% increase in pricing compared to the 15% accumulated inflation for the year [1].

The company's margins have collapsed, with gross profits and EBITDA down 30% in inflation-adjusted terms. Margins deteriorated sequentially, with 1Q25 gross margins at 26%, compared to 20% in 2Q25. Negative cash flows were reported for the 1H25 period, with the company's CFO noting AR$24 billion in negative cash flow due to income taxes paid (AR$51 billion), which were much higher than accrual income taxes for the period (AR$10 billion) [1].

Loma Negra's debt situation has also worsened, with the company closing the quarter with AR$256 billion in net debt, 71% denominated in USD. The company refinanced $113 million (~AR$135 billion) at 8% for only two years, indicating a short-term financing trend. Cash and investments stood at AR$15 billion, suggesting continued FCF outflows would require higher debt [1].

Despite the company's cyclical nature, its current financial situation is not attractive. Assuming a cycle-average of $150 million in operating income, minus $30 million in cash-based interest, and 35% income taxes in Argentina, the company could potentially generate $80 million in net income. However, it trades at a market cap of $1.25 billion, or a multiple on cycle-average earnings of 15x, which seems overvalued given its current financial challenges [1].

References:
[1] https://seekingalpha.com/article/4815549-loma-negra-volumes-are-falling-sequentially-and-margins-are-suffering