Can you break down unit cost trends into one-off vs. recurring, and what levers can help margins recover in H2 and 2027?

Management identified permanent costs (depreciation, packaging, labor) and temporary ones (fuel due to additional metal, bags). They stated that the impact of the 25kg bag project was fully translated to price increases. They also highlighted a positive impact on costs from new thermal energy contracts starting September and volume leverage diluting sales costs. “We remark some of those that are permanent, but those will remain and some [Foreign Language] During the quarter, we saw some increase in frames due to the increasing gas due to the impact of the more additional metal. And additionally, looking forward starting on September, we're going to start our [Foreign Language] And we have already signed contracts to start using in that period with terms better than the ones that we use most production cycle. So that is going to have a positive impact on costs.”

Could you provide more details on the implementation of the 25-kilo bag project, its commercial strategy impact, and pricing?

The project was driven by regulation to improve worker safety, requiring an investment of over $5 million. It was completed on time and successfully. The increased costs associated with packaging and operations for the smaller bags were fully translated into price increases, as the market was not willing to accept the higher costs otherwise. “First of all, I would like to remark that this change in from 50-kilo bag to 25-kilo bag was due to regulation. This is related to improve the ambitions of the workers and to call this heading back. The operation investment of more than $5 million. We were able to fulfill it on in time, and it was all success.”

LOMA

Loma Negra (LOMA) Q2 FY26 earnings call: the analyst Q&A

Earnings call· Jun 2026 (Q2 FY26)· Materials· Aug 7, 2026

Source: earnings call transcript

Executive summary

Loma Negra Q2 FY26 — Gradual Demand Recovery Amidst Cost Pressures

Loma Negra experienced a quarter of mixed performance in Q2 FY26, with consolidated net revenue growing 21% year-over-year despite a slight decline in cement volumes. While the company demonstrated resilience in dollar-denominated EBITDA per ton and improved its net debt leverage, profitability was impacted by higher costs and depreciation across segments. Management anticipates a continued gradual recovery in demand for the second half of the year, supported by infrastructure projects and potential easing of monetary conditions.

Highlights

Consolidated net revenue increased 21% year-over-year, reaching Ps. 238.1 billion.
EBITDA generation per ton in dollar terms was up 14% year-over-year to Ps. 32.1, scoring operational resilience.
Net debt to LTM adjusted EBITDA ratio improved to 1.3x, down from 1.47x at the end of 2025.
Net profit attributable to owners totaled Ps. 7.5 billion for the quarter, significantly up from Ps. 0.5 billion in Q2 FY25.
Cement volume decreased moderately by 1.4% year-over-year, outperforming the industry's 5% decline.

Concerns

Consolidated adjusted EBITDA decreased 2.5% year-over-year to Ps. 48.2 billion, with margin contracting 97 basis points to 20.2%.
Consolidated gross profit decreased 3.9% year-over-year, with gross margin contracting 122 basis points to 19.2%, mainly due to higher costs and depreciation.
SG&A expenses increased 15.7% year-over-year, reaching 12.1% of sales, up 132 basis points.
Concrete revenues decreased 11.2% year-over-year, driven by an 18.6% decline in volumes.
Aggregates revenues decreased 10.3% year-over-year, with volumes down 12.2%.
Railroad adjusted EBITDA margin turned negative at -5.2% in Q2 FY26, compared to a positive 9.8% in Q2 FY25, due to higher fuel and labor costs.

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Cement Outperformed industry, bulk cement supported by large-scale projects, bag cement under pressure. Favorable pricing cushioned higher costs. Volumes: increased by 1.4% YoYAdjusted EBITDA margin: 23.9% (down 81 bps YoY)	increased by 2.2%	1.4% (volumes)	—	23.9% (Adjusted EBITDA margin)
Concrete Affected by lower demand from special projects (infrastructure, wind farms). Rosario volumes more stable. Improved margin due to favorable pricing and lower costs. Volumes: decreased by 18.6% YoYAdjusted EBITDA margin: -4.3% (expanded 867 bps from -13% YoY)	decreased by 11.2%	-18.6% (volumes)	—	-4.3% (Adjusted EBITDA margin)
Aggregates Affected by same dynamics as Concrete (weaker demand for public works). Improved margin due to increasing price and cost control. Volumes: decreased by 12.2% YoYAdjusted EBITDA margin: -18.6% (expanded 877 bps from -27% YoY)	decreased by 10.3%	-12.2% (volumes)	—	-18.6% (Adjusted EBITDA margin)
Railroad Driven by higher transportation of grain and fraction. Softer pricing conditions. Negative EBITDA margin due to higher cost of sales (fuel, labor). Transported volumes: up 10.1% YoYAdjusted EBITDA margin: -5.2% (from +9.8% YoY)	increased by 8.6%	10.1% (transported volumes)	—	-5.2% (Adjusted EBITDA margin)

Capital programs

25-kilogram bagging project completed $5 million

Benefit:Transition from 50-kilo to 25-kilo bags for worker safety

Investment of more than $5 million to fulfill regulatory requirements for worker safety. Completed on time and was a success. Costs fully translated to price increases.

Risks & headwinds

Weak April demand due to heavy rains Q2 FY26 (specifically April)

Cement volume decreased 1.4% YoY; industry cement dispatches declined 5% YoY; ISAC declined 2.8% YoY in April.

Mitigation:May and June trends normalized closer to last year's levels.

Higher costs and depreciation impacting margins Q2 FY26

Consolidated gross margin contracted 122 bps to 19.2%; Consolidated adjusted EBITDA margin contracted 97 bps to 20.2%.

Mitigation:Favorable pricing dynamics partially cushioned impact in Cement; most kilns shut down in May to avoid higher energy costs; new thermal energy contracts starting September expected to have positive impact on costs.

Weak demand for concrete and aggregates segments Q2 FY26

Concrete revenues down 11.2% (volumes down 18.6%); Aggregates revenues down 10.3% (volumes down 12.2%).

Mitigation:Expect new projects to break ground in the near term.

Increased fuel and labor costs in Railroad segment Q2 FY26

Railroad adjusted EBITDA margin turned negative at -5.2% from +9.8% YoY.

Mitigation:Overall cost control mentioned, but no specific mitigation for this segment's fuel/labor costs.

Potential for continued volatility and short-term decline in demand Second half of the year and beyond

Management stated, 'may continue to see some volatility into potential short-term decline'.

Mitigation:Expectation of gradual recovery driven by project approvals under new regime, road concessions, easing monetary conditions, and credit availability.

What to watch in Q3 FY26

Impact of new thermal energy contracts on costs

Starting September (Q3 FY26)

Current Higher costs due to fuel prices impacting Q2 FY26.

Target Positive impact on costs, improved margins.

Why it matters

New thermal energy contracts are expected to provide better terms and positively impact costs, addressing a key headwind for profitability.

And additionally, looking forward starting on September, we're going to start our [Foreign Language] And we have already signed contracts to start using in that period with terms better than the ones that we use most production cycle. So that is going to have a positive impact on costs.

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Q&A highlights

If credit access remains limited in the second half, will other factors be sufficient to drive demand recovery?

Management believes significant credit improvement is unlikely in H2. However, other factors like projects under the new regime and road concessions are starting to impact volumes. They also noted that months starting in September are historically strong for cement dispatches.

“We believe that it's difficult to see significant credit improvement in the second half of the year. And we do believe there are other factors that should start to impact positively our level of activity. Several of the projects that were presented with the regime. We are working on some of those. We expect them to start impact -- to start showing some impact on volumes in the coming months.”

asked by Sofia Vatta · answered by Sergio Faifman

2 min read 5 chapters

Detailed narrative

Market Conditions and Demand Outlook

The second quarter saw a more moderate growth trajectory in Argentina's economic activity, with construction activity showing mixed trends. Industry cement dispatches declined 5% year-over-year, primarily due to heavy rains in April. Loma Negra's own volumes declined less severely at 1.4% year-over-year, outperforming the industry as May and June trends normalized.

Management remains cautiously optimistic for a continued gradual recovery path in the second half, supported by project approvals under the recent regime, road concessions, potential easing of monetary conditions, and expected improvements in credit availability.

Profitability and Cost Pressures

Consolidated gross profit decreased by 3.9% year-over-year, with gross margin contracting 122 basis points to 19.2%. This was mainly attributed to higher costs and depreciation, particularly in the Cement and Railroad segments. Specific cost drivers included depreciation following the capitalization of the 25-kilogram bagging project, higher packaging costs, maintenance, and increased fuel prices.

SG&A expenses also rose by 15.7% year-over-year, contributing to a 132 basis point increase as a percentage of sales. To mitigate energy costs, most kilns were shut down in May to avoid operating during winter months.

Segment Performance Overview

The Cement segment led revenue growth, increasing 2.2% year-over-year with volumes up 1.4%, outperforming the industry. Bulk cement continued to perform well, supported by larger-scale projects, while bag cement remained under pressure. Concrete and Aggregates segments experienced revenue declines of 11.2% and 10.3% respectively, with corresponding volume decreases, mainly due to lower demand from special projects and public works.

The Railroad segment saw revenues increase 8.6% year-over-year, driven by higher transported volumes, but its adjusted EBITDA margin turned negative due to increased fuel and labor costs.

25-Kilogram Bag Project Implementation

Loma Negra successfully completed the transition from 50-kilogram to 25-kilogram cement bags, a change mandated by regulation to improve worker safety. This project required an investment of over $5 million and was fulfilled on time, proving to be a success.

While the change led to higher packaging and operational costs, the company confirmed that these increased costs were fully translated into price increases, maintaining pricing dynamics positive for the Cement segment.

Financial Position and Capital Allocation

The company ended the quarter with net debt of Ps. 274 billion, equivalent to USD 185 million, and an improved net debt to adjusted EBITDA ratio of 1.3x, down from 1.47x at year-end 2025. Cash flow from operating activities significantly improved to Ps. 18.1 billion, compared to an outflow of Ps. 29.7 billion in Q2 FY25, driven by better working capital management.

Loma Negra also cancelled Class 4 corporate bonds for $10 million in May 2026, leaving no remaining structured debt maturities for the rest of the year. Approximately 87% of total debt is denominated in U.S. dollars, with an average duration of 1.4 years.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.