Loma Negra (LOMA) Q3 2026 earnings review
Loma Negra cuts its debt, but construction volumes fall again
Loma Negra, Argentina's largest cement producer, protected its core cement profit margins and paid down debt even as construction shipments fell across every division. Inflation-adjusted revenue dropped 3% from a year ago as winter rain and stalled public works cut cement volumes by 6% and concrete volumes by 25%. Chief executive Sergio Faifman said activity rebounded in September as weather improved, and a post-quarter bond sale cleared the company's near-term debt maturities.
| Net revenue (inflation-adjusted) | Ps. 270.1B -3.2% from a year ago |
|---|---|
| Cement segment EBITDA margin | 24.9% +0.7 percentage points from a year ago |
| Net debt to LTM Adjusted EBITDA | 1.00x down from 1.30x last quarter |
| Full-year outlook | Unchanged qualitative focus on efficiency and late-year recovery |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because lower kiln costs and a stronger balance sheet balanced out another delay in Argentina's construction recovery. On the positive side, shutting kilns during the high-cost winter months and raising prices lifted cement margins, while strong cash flow cut debt leverage to 1 times operating cash profit. The bad news: heavy losses in the railroad, concrete and aggregates divisions plus a 16% jump in overhead expenses pulled overall operating margins down.
The question now is whether the September shipment rebound marks the start of a real building recovery or just dry weather after two rainy months. Optimists point to lower natural gas contracts and delayed road projects finally breaking ground, while skeptics note that public works and household credit remain weak. Fourth-quarter cement and concrete volumes during the peak summer building season will settle it.
🐂 Bull Case
Kiln Shutdowns and Pricing Lifted Cement Margins
Loma Negra's core business produces cement, masonry cement and lime, which generate nearly nine-tenths of total sales. In the second quarter, higher packaging and fuel costs squeezed this division's profit margin, raising concern that inflation would outrun price increases. Chief executive Sergio Faifman said the division improved its margin this quarter even though winter typically brings the highest seasonal energy bills.
The company protected its profitability through price increases and by burning clinker — the intermediate material baked into cement — that it had stockpiled during warmer months. Management also noted that "the planned shutdown of most kilns during the quarter, helped mitigate exposure to higher winter energy costs", while fuel, electricity, packaging and contractor expenses all fell from a year ago. Unit production costs rose just 2.6% despite a 6.3% drop in shipment volumes, lifting the cement division's Adjusted EBITDA margin (operating cash profit before interest, taxes and depreciation) by 0.7 percentage points to 24.9%.
What to watch: fourth-quarter cement unit costs when the kilns restart under newly signed natural gas contracts. A second straight quarter of expanding cement margins will confirm that lower gas rates and the lapping of last year's packaging project have permanently lowered the cost base.
Cash Flow and Bond Issue Cut Leverage
Loma Negra has steadily paid down borrowings over the past year while managing the risk that most of its debt sits in US dollars and comes due quickly. At the end of September, short-term borrowings represented 69% of total debt, pushing the average debt life down to 1.2 years from 1.4 years in June.
- Net debt: Ps. 220.5 billion (US$145 million), down 41.3% from a year ago
- Net debt to last-twelve-months Adjusted EBITDA: 1.00 times, down from 1.30 times in the second quarter and 1.47 times at year-end
- New Class 7 bond issued in October: US$150 million for 36 months at a 6.25% fixed interest rate
Strong cash generation let the Argentine producer repay Ps. 25.0 billion of loans and interest during the quarter. Then, on October 22, management sold a US$150 million three-year bond in the local market "to refinance short-term liabilities, strengthening the Company's debt profile by extending its average debt maturity". Because short-term debt stood at about US$133 million at quarter-end by our math, the new bond covers the near-term refinancing wall.
What to watch: the average debt maturity and short-term debt share on the fourth-quarter balance sheet. Those figures will show how much of the US$150 million bond went to retire near-term dollar loans.
🐻 Bear Case
Volume Recovery Slipped Again on Weak Construction
"Industry volumes remained subdued during the third quarter, as July and August were affected by still-soft activity levels and heavy winter rainfall," chief executive Sergio Faifman said. Management had previously pointed to the second half of 2026 for a construction rebound driven by large infrastructure incentives and road concessions, and Faifman added that a weather-driven pickup in September is an encouraging sign for the months ahead.
- Cement, masonry and lime volume: 1.28 million tons, down 6.3% from a year ago
- Concrete volume: 0.12 million cubic meters, down 24.9% from a year ago
- Aggregates volume: 0.26 million tons, down 16.1% from a year ago
- Railroad volume: 1.05 million tons, down 7.0% from a year ago
The numbers show a deeper slump than winter rain alone explains, because every division shrank and cement shipments fell much faster than the 1.4% dip recorded in the second quarter. Bagged cement sold to households for home building stayed weak, while concrete and stone aggregates suffered from a "lower contribution from special projects, weaker demand associated with public works, and reduced activity in industrial and architectural projects". The release did not mention any shipments starting for road concessions or large investment-regime projects.
What to watch: fourth-quarter cement and concrete shipment volumes. Because spring and summer are peak building months with drier weather, another year-over-year volume drop would prove that delayed public works and scarce credit — not winter rain — are holding back sales.
Non-Cement Divisions Drained Consolidated Operating Profit
Outside of cement, Loma Negra operates ready-mix concrete plants, stone quarries for aggregates, and a freight railroad. These three supporting divisions generate just over one-tenth of consolidated revenue after inter-company eliminations, but they are supposed to feed cement demand and carry freight profitably.
All three supporting businesses lost money at the Adjusted EBITDA level this quarter, pulling the company-wide margin down by 0.7 percentage points to 20.1% even as cement profitability improved. The railroad division swung from a positive 3.4% Adjusted EBITDA margin a year ago to negative 11.0% as track maintenance, outside contractor bills and payroll jumped while grain, frac sand and stone freight volumes fell 7.0%. Concrete posted a negative 4.6% margin because low shipment volumes could not absorb fixed plant costs, and aggregates fell to negative 19.4%.
What to watch: railroad and concrete Adjusted EBITDA margins in the fourth quarter. Continued operating losses in the rail network would show that maintenance and labor inflation have broken the division's cost structure even after storm-damaged tracks in Bahía Blanca reopened.
Rising Overhead Costs Outpaced Revenue
While plant managers kept production costs in check — gross margin, the share of sales left after manufacturing costs, edged down just 0.1 percentage points to 17.2% — corporate overhead moved the other way. Selling and administrative expenses rose 16.1% after inflation adjustment to Ps. 29,863 million, even as net revenue shrank 3.2%.
Overhead climbed to 11.1% of revenue, up 1.8 percentage points from 9.2% a year earlier, driven by "higher advertising and promotional expenses, as well as higher consulting and IT expenses". That overhead growth wiped out the per-ton cost gains achieved inside the cement kilns and pushed operating profit before financial items and bank taxes down 24.4% by our math.
What to watch: selling and administrative expenses as a percentage of revenue in the fourth quarter. If overhead stays above 11% of sales while volumes lag, marketing and technology spending will keep eating into factory efficiency gains.
👓 Other Themes
Currency Swings Drove the Bottom-Line Profit Turnaround
Loma Negra swung from a net loss of Ps. 11.5 billion a year ago to a net profit of Ps. 14.5 billion, but accounting for Argentina's currency and debt explains the jump rather than factory operations. Because 91% of company debt is in US dollars, a slower drop in the peso cut foreign-exchange losses by 81.3% to Ps. 7.4 billion, while lower debt cut net interest expense by 66.2%.
💲 Other KPIs
Free cash flow — operating cash minus capital spending — nearly tripled from Ps. 23,127 million a year ago, reaching 25.3% of sales by our math. Operating cash flow doubled to Ps. 86,265 million on "favorable working capital dynamics, reflecting an improvement in trade and other receivables, together with lower inventory levels and higher tax payables" as winter clinker stockpiles were drawn down.
Customer advances — cash paid upfront by buyers for building materials not yet delivered — stood 30.1% below the year-end balance of Ps. 17,835 million in constant pesos by our math. In the cash flow statement, customer advances added Ps. 546 million during the third quarter compared with Ps. 2,957 million in the same period last year, showing modest pre-buying ahead of summer.
Spending on property, plant, equipment and software fell 7.2% from a year ago and took 6.7% of third-quarter revenue by our math. Over the first nine months of 2026, capital spending dropped 33.5% to Ps. 40,959 million following the completion of the 25-kilogram cement bagging upgrade in mid-2025, leaving more cash to pay down debt.
🔮 Guidance
Unchanged. Loma Negra does not issue numerical targets, and chief executive Sergio Faifman reiterated that "we remain positive about the remainder of the year and will stay focused on preserving the efficiency gains we have achieved." After shipment volumes fell 2.2% in cement and 12.9% in concrete over the first nine months, reaching positive full-year volume requires a sharp fourth-quarter rebound.
❓ Key Questions
How much did September cement volumes grow?
Management said September shipments beat last year's level after rain depressed July and August, but gave no monthly numbers. Disclosing the September and October growth rate would show whether demand is genuinely recovering or merely catching up on rained-out deliveries.
Have large investment-regime or road projects started ordering cement?
Last quarter management expected new road concessions and projects under Argentina's large-investment regime (RIGI) to start lifting bulk cement demand in the second half. The third-quarter release blamed weaker public works and special projects for a 24.9% drop in concrete volume without mentioning either pipeline.
What drove the surge in railroad track maintenance costs?
The railroad division swung from a 3.4% operating cash margin a year ago to negative 11.0%, which the company blamed on track maintenance, outside services and payroll. Investors need to know whether the maintenance work is a one-time repair bill or a permanent cost increase.
What is the timeline for the controlling stake sale?
Following the April 2026 restructuring of indirect parent InterCement, Loma Negra may undergo a marketing process to sell the controlling equity stake through September 2028. Management has not updated investors on whether a sale process has started or how it affects dividend policy.