Loma Negra (LOMA) Q1 2026 earnings review
Net Income Surges on FX Gains While Pricing Power Falters
Loma Negra reported flat top-line revenue growth (+1.1% YoY) for 1Q26, yet Net Income jumped 44.2%. This massive bottom-line beat is largely a financial illusion driven by a Ps. 32.4 billion non-operating FX gain resulting from peso appreciation against USD-denominated debt. Beneath the surface, the operational reality is mixed. While volumes showed signs of accelerating in late Q1 (especially in Concrete and Railroad), severe deflationary pricing pressure meant this volume growth did not translate to the top line. Adjusted EBITDA margins managed to expand 94 bps to 24.9%, but this was entirely reliant on disciplined SG&A cost containment rather than core pricing power.
🐂 Bull Case
Operating Cash Flow reversed from negative Ps. 1.7B in 1Q25 to positive Ps. 19.7B in 1Q26, driven by excellent working capital management, slower inventory buildup, and optimized receivables.
After a subdued start to the year, bulk cement dispatches recovered sharply in March, supported by concrete producers, industrial customers, and private development.
🐻 Bear Case
Concrete volumes surged 14.1%, but segment revenue fell 1.9%. Railroad volumes jumped 14.8%, but revenue rose just 2.2%. The company is trading price for volume in a highly competitive environment.
The parent company (ICP) completed its restructuring, distributing shares to creditors. Loma Negra's indirect equity is now subject to a marketing/sale process through September 2028, creating strategic uncertainty.
⚖️ Verdict: ⚪
Neutral. The company is executing well on the elements it can control—slashing SG&A and optimizing working capital to generate cash. However, the inability to pass on costs or maintain pricing alongside volume growth, combined with heavy reliance on macro FX gains for net income, caps the upside.
Key Themes
Pricing Squeeze Contradicts Volume Recovery
The most glaring red flag in the quarter is the decoupling of volume and revenue. Concrete segment volumes accelerated by 14.1% YoY, yet revenue contracted 1.9% due to softer pricing dynamics. Similarly, Railroad volumes grew 14.8%, but revenue only crawled up 2.2%. This Reversing trend in pricing power indicates that Loma Negra is forced to sacrifice margins on the top line to maintain market share in a weak macroeconomic environment.
Working Capital Optimization Drives Cash Generation
Operating Cash Flow experienced a massive Reversing trend, jumping from a Ps. 1.7B deficit in 1Q25 to a Ps. 19.7B surplus. This was achieved during the most working-capital-intensive period of the year (summer clinker production) through targeted improvements in accounts payable and slower inventory growth.
Macro Impact: Net Income Distorted by Peso Appreciation
The headline 44% surge in Net Income is highly misleading. It was driven by a Ps. 32.4 billion gain on net monetary position (up from Ps. 11.8B in 1Q25), primarily because a 5% appreciation of the Argentine Peso reduced the liability value of the company's USD-denominated debt (which makes up 84% of total debt). This is a macro-driven paper gain, not an operational victory.
Cost Containment Shields Margins
Despite flat revenues, Adjusted EBITDA margin improved by 94 bps to 24.9%. This Stable operational profitability was secured through strict cost control, with SG&A expenses dropping 3.9% YoY. Lower salary and freight expenses more than offset higher IT and marketing investments.
Aggregates Segment Collapse
While other segments saw volume recovery, the Aggregates segment is Decelerating sharply, with volumes plummeting 18.3% YoY. The decline was driven by reduced demand from road construction and general infrastructure projects, though favorable mix shift (fewer low-price fine aggregates) prevented a total revenue wipeout.
Parent Company Restructuring Overhang
The judicial reorganization of indirect controlling shareholder InterCement Participacoes (ICP) concluded with equity shifting to creditors like Latcem LLC and Redwood. More importantly, Loma Negra is now subject to a mandated marketing process for the private sale of its indirect equity through September 2028. This long-term M&A overhang could distract management and heavily influence the stock's trading multiples.
25-Kilogram Bagging Project Completion
The transition to the new 25-kilogram bagging format is complete. While it caused a near-term uptick in depreciation and packaging costs within the Cost of Sales, the completion of this CapEx cycle was the primary reason investing cash outflows dropped from Ps. 15.0B in 1Q25 to Ps. 12.0B in 1Q26, freeing up more free cash flow moving forward.
Other KPIs
Stable. The leverage profile improved sequentially from 1.47x at the end of FY25, though it remains higher than the 0.96x recorded a year ago. The company successfully issued a US$ 60M Class 6 corporate bond to extend average debt maturity to 1.4 years.
Accelerating. While still operating at a loss, the margin improved by 424 basis points from -5.5% in 1Q25. Volume recovery helped dilute fixed costs, though negative pricing prevented a return to outright profitability.
Guidance
Stable to Accelerating. Management did not provide specific financial guidance figures but explicitly noted that a strong March exit rate reinforces their outlook for the remainder of the year, expecting a more sustained recovery in demand compared to the subdued start of Q1.
Key Questions
Pricing Strategy and Margin Floor
Concrete and Railroad segments experienced double-digit volume growth but flat or negative revenue growth. At what point does management prioritize price over market share, and what is the absolute floor for operating margins in these segments?
M&A Marketing Process Mechanics
With the ICP reorganization plan authorizing a marketing process for Loma Negra's indirect equity through 2028, how will this process be structured, and what guardrails exist to protect minority shareholders during a potential transaction?
Winter Energy Cost Headwinds
The company cited maximizing clinker production during the summer to avoid higher winter energy costs. Given current domestic energy pricing dynamics, what is the expected sequential margin impact as we enter the colder Q2 and Q3 months?