Loma Negra's Rocky Start: Navigating Argentina's Economic Crossroads in 1Q25

The first quarter of 2025 has been a tale of contrasts for Loma Negra, Argentina’s cement industry giant. While its top-line performance stumbled under the weight of pricing pressures and macroeconomic headwinds, operational resilience and margin improvements suggest the company is positioned to capitalize on the country’s nascent economic rebound. Let’s dissect the numbers to uncover whether this rocky start is a speed bump or a pothole in the road to recovery.

Revenue Decline: Pricing Pressures vs. Volume Gains

Loma Negra’s net sales fell 8.9% YoY to Ps. 163,151 million (US$149 million) in 1Q25, driven by a 10.9% drop in cement segment revenue. This contraction is puzzling given that cement volumes surged 8.9% to 1.15 million tons—a strong indicator of recovering demand, particularly in residential construction where bagged cement sales jumped 12%. The disconnect highlights the crux of the problem: pricing power erosion.

The Argentine construction market, still reeling from years of hyperinflation and economic instability, is grappling with oversupply and weak demand for bulk cement, which accounts for most of Loma Negra’s sales. While the company is expanding its higher-margin bagged cement business, the sector’s reliance on bulk sales leaves it vulnerable to price wars.

Net Profit Collapse: A One-Time Hit or Structural Issue?

The 73.1% YoY drop in net profit to Ps. 21,250 million was a shock, but management insists this isn’t a sign of operational failure. The primary culprit? A 83.6% YoY plunge in the gain on net monetary position—a non-operational item tied to Argentina’s volatile inflation. In 1Q24, this gain swelled to Ps. 154,733 million as liabilities in pesos appreciated against dollar-denominated assets. This year, with inflation cooling to 10.3% in March 2025 from 136% in 2023, the windfall evaporated.

Stripping out this anomaly, core performance was stronger:
- Adjusted EBITDA dipped just 3.2% YoY to Ps. 39,168 million.
- Cement segment margins jumped 279 bps to 28.9%, fueled by lower energy and maintenance costs.

This underscores Loma Negra’s ability to control costs even as macro headwinds persist.

Operational Momentum: Volumes Signal a Turnaround

While revenue and profits took a hit, the company’s operational metrics are flashing green:
1. Cement volumes hit 1.15 million tons, up 8.9% YoY, with bagged cement—key to residential recovery—surging 12%.
2. Concrete volumes soared 22.8%, driven by infrastructure and renewable energy projects.
3. Rail volumes rose 19.9%, despite weather disruptions, reflecting stronger logistics demand.

CEO Sergio Faifman pointed to April’s 28% YoY jump in cement consumption as a sign of accelerating recovery. With Argentina’s government projecting 5% GDP growth in 2025, Loma Negra’s volume gains could translate into sustained top-line growth as pricing stabilizes.

Financial Health: Conservative Leverage, Lower Costs

The company’s balance sheet remains a bright spot:
- Net debt/EBITDA ratio improved to 0.96x, well below the 3.0x threshold that often spooks investors.
- Financial expenses plummeted 77% to Ps. 8,981 million, benefiting from reduced debt and lower interest rates.

This financial flexibility positions Loma Negra to weather macro turbulence while investing in growth. The company is expanding its bagged cement capacity and upgrading rail infrastructure—a smart bet given rising demand for renewables and private infrastructure.

Conclusion: A Company Betting on Argentina’s Comeback

Loma Negra’s 1Q25 results are a mixed bag, but the underlying story is one of resilience and strategic positioning. While revenue and net profit figures are lackluster, operational metrics and margin improvements suggest the company is navigating Argentina’s choppy waters effectively.

The key data points to watch:
- Cement consumption trends: April’s 28% YoY jump is a promising sign, but sustainability matters.
- Pricing power: Can Loma Negra stabilize or even grow cement prices as demand outpaces supply?
- Debt and cash flow: The 0.96x net debt/EBITDA ratio leaves room to maneuver, but cost discipline must remain a priority.

With Argentina’s economy slowly emerging from years of crisis, Loma Negra’s strong market position and operational leverage make it a critical player in the recovery. Investors should view the first-quarter stumble as a temporary setback rather than a failure—provided the company can turn volume growth into pricing power.

In short, Loma Negra is a bet on Argentina’s comeback. For now, the odds look favorable.