Loma Negra sells its Paraguay business unit, Iguazú Cementos, which represents 10% of total Loma Negra´s revenues and was the less harmed by the pandemic. Its market valuation is estimated around US$80 million but the value of the deal was not disclosed.
The firm has been improving its debt profile during 1H20, and therefore its liquidity, to the expense of higher interest rates paid for the new loans. Consequently its interests´ coverage worsened in 3Q20 from 4.97 to 2.79 times y/y.
On the other hand, the proportion of debt in foreign currency was improved this last quarter (52 vs. 70% y/y), but the risk of futures exchange rate losses remains important.
The firm might be anticipating a slow recovery in sales, since by the middle of the third quarter only 50% of construction projects are back in activity. In response to this long difficult situation, the firm is strengthening its financial situation. At first it did so by improving liquidity, and now by decreasing the impact that financial costs might have on profitability. To do so, the CEO informed that the funds of Iguazú Cementos will be used to partially cancel debt. In addition, in a message to stockholders, he said that alternatives to pay dividends are being evaluated.