Cementos Progreso continues its expansion in Central America, its production will increase 15%

José Raúl González Merlo, general manager of this national company, confirmed the investment in an interview with Prensa Libre, making known the current situation of the company and its expansion plans.

What is the amount of the investment and what type of operation did they acquire?

Yesterday (December 29) at the end of the day, a purchase transaction for Cemex’s operations in Costa Rica, consisting of a cement plant and other concrete and aggregates operations, was carried out and formalized, while in El Salvador the company that handles distribution in that country. The acquisition was worth US $ 335 million for both operations

However, regulatory aspects must still go through, so it is expected that during the first semester of next year the respective competition authorities of Costa Rica and El Salvador will be aware of the transaction and give their approval, which will allow us to conclude the acquisition and until then, we could take control of the operations.

What motivated you to make this purchase?

The acquisition is part of an aspiration that we at Cementos Progreso have to be able to grow outside the borders of Guatemala. We already have an operation in Honduras; In December 2019 we acquired the assets of a cement mill in Panama; Last year we inaugurated a grinding operation in Belize and we also have a cement distribution operation in Colombia.

In the case of Guatemala, does Cemex still operate, or did Cementos Progreso acquire that operation?

Cemex still maintains its operations in Panama, Costa Rica and Guatemala. This (the new transaction) was a specific divestment that they made.

What are the plans after this purchase?

In the case of Costa Rica and El Salvador, once all the regulation is completed, the intention is to be able to incorporate both the assets, but especially the collaborators, into the entire system that we already have in place in Central America through Progreso. What we are looking for is to continue expanding in the region.

The plans in the case of Guatemala are to continue supplying the market, the San Gabriel plant is operating successfully as well as the San Miguel plant, which satisfy both the local market and certain exports. In addition, the operation in Belize has to be consolidated and we have only been operating in Panama for two years.

What is the amount of national production and in the region, and how much will it increase with the new acquisition?

Guatemala, approximately 3.6 million tons of cement at the end of 2021. We have a current capacity of 5.3 million tons per year in Central America, which includes Guatemala, Honduras, Belize, Panama and Colombia.

The operations in Costa Rica and El Salvador would increase this sales volume in tons of cement by approximately 15% and it would be reaching about 6 million tons, and that would undoubtedly make us the number one cement company in central America.

It represents significant growth for us and we are very excited, hoping that this can be resolved favorably and then start operating in those two countries.

What percentage of the market does it have in Guatemala and in the region?

In the case of Panama we have a 15% stake. In Honduras it is close to 40%; in Guatemala, it is more or less 70%; and Belize about 40% and 45%. I cannot provide the figures for the Costa Rican and El Salvador markets at this time because they do not apply to me yet, given legal restrictions.

There are companies that have bet on the placement of green bonds. In the case of Cementos Progreso, have you already analyzed it?

In the past we have also issued bonds in the international financial markets. We did it in due course to give ourselves the financial flexibility we needed for the completion of the San Gabriel plant.

At this time, the resources we are using are our own and from traditional bank financing sources. However, I agree that the issuance of green bonds is an option to be able to use when necessary, but it is a means and not so much an end. On the ecological and environmental issue, we have about 30 million trees planted in recent years.

It may interest you: This is the plant in which Cementos Progreso invested US $ 500 million in San Juan Sacatepéquez

He recently mentioned that in Guatemala there was still a lot of work to be done on the issue of legal certainty to invest. What is the situation and what is needed to continue expanding investment in the country?

To the extent that we strengthen legal certainty at all levels and specifically in the field of infrastructure, we will see better economic results in the short term than we have.

Obviously the issue of infrastructure is one of the most important for us, but at the same time it is an issue that runs across all sectors of the economy and benefits everyone because we need to use logistics, roads, ports and airports. We need an infrastructure in good condition to aspire to be a developed country.

José Raúl González Merlo, CEO of Cementos Progreso, explained the expansion that that company has had and the new acquisitions. (Photo, Free Press: Courtesy).

How did the construction and building materials sector fare in 2021 and what are your expectations for next year?

The construction materials sector gave a very important rebound in 2021, and effectively the collection of the cement distribution tax is above 20%. That shows how the industry was resilient, how remittances were used by many Guatemalans to improve, remodel, expand or build their homes, since due to the pandemic they spent a lot of time at home and saw the need for improvements.

We saw very important growth in the construction industry in general and in the construction materials industry in particular and we expect that growth to continue, but to return to normal levels. We hope that the growth figures shown by the Bank of Guatemala can materialize and we can continue to promote infrastructure, decent housing and all the multiplier effect that construction brings.


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