Also, concurrent with this IPO, in which shares will begin trading on the NYSE later this morning, LOMA conducted a 30.0 million share offering through the Argentine placement agent in Argentina. In total, LOMA has raised about $114 million in gross proceeds through both the U.S. and Argentine offering. It plans to use the proceeds to fund its growth plans primarily through the expansion of its L'Amali plant.
LOMA is the leading cement producer in Argentina. The company believes that the economic recovery of Argentina represents one of the most attractive opportunities in global emerging markets today. Cement consumption is highly correlated to economic activity and LOMA expects demand for cement to grow significantly over the next five years in Argentina. It specifically produces cement, masonry cement, aggregates, concrete and lime to wholesale distributors, concrete producers and industrial customers. Its products are primarily used in construction, which should be one of the fastest growing sectors of the Argentine economy in the next five years.
LOMA held a market share of 45.4% in terms of sales volume in Argentina in 1H17. As the leading market player, LOMA believes it’s the best positioned company to benefit from the expected increase in cement consumption in Argentina. After two decades of capital scarcity across the industry, installed cement production capacity in the country is reaching its limit and LOMA believes that Argentina will soon face a structural cement supply deficit.
Furthermore, the company holds significant limestone reserves and it estimates that its existing quarries have sufficient reserves to support its operations for more than 100 years. LOMA also owns 51% of an cement production plant in Paraguay, another key growth market in South America.
In regards to Argentina, since assuming office in December 2015, the Macri administration in Argentina has announced and executed several structural economic, regulatory and policy reforms. While 2016 was a transition year from a political and economic perspective, 2017 is showing signs of recovery for the economy, particularly for the construction activity. In the first seven months of 2017, cement consumption increased 10.9% YoY.
In September 2016, the Macri administration announced a US$260 bln investment plan across multiple sectors of the economy, including improvement of existing roads and construction of new roads and highways, and the construction of dams and social housing, among others. Investment in transportation infrastructure and public works projects in Argentina are expected to total approximately US$155 bln mainly during the next 10 years. The Argentine government launched a nationwide plan to renovate and operate existing roads and highways and to develop new ones for a total of US$55 bln, from 2017 through 2027.
Turning to the financials, the company is profitable with good revenue growth. In 2014, LOMA posted revenue of Ps (Argentine pesos) 5.97 bln. In 2015 revenue grew 32% to Ps7.87 bln then in 2016 it grew 25% to Ps9.87 bln. In 1H17, revenue grew 54% YoY to Ps6.67 bln. Adjusted EBITDA margins are quite good: 26.1% in 1H17 and 23.8% in 2016, up from 20.7% in 2015.