Good day, and welcome to the Loma Negra Fourth Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Gaston Pinnel, Head of Investor Relations. Please go ahead sir.

Thank you. Good morning everyone and thank you for joining us today. We appreciate everyone's participation. By now, everyone should have access to our earnings press release and the presentation for today's call. Speaking during today's call will be Sergio Faifman, our CEO and Vice President of the Board of Directors; and Marcos Gradin, our CFO. Both will be available for the Q&A session. Before we proceed, I would like to make the following Safe Harbor statements. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filing with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. I would also like to remind you that the following recent categorization of Argentina as a hyperinflationary economy in accordance with IFRS standards starting in this fourth quarter of 2018, we began applying IFRS rules IAS 29. For comparison purposes and a better understanding of our underlying performance, in addition to presenting as reported results. We're also disclosing selected figures as previously reported excluding rule IAS 29. Additional information in connection with the application of rule IAS 29 can be found in our earnings reports. Now, I would like to turn the call over to our CEO, Sergio Faifman.

Thank you, Gaston. Hello everyone and thank you for showing up today. It's a pleasure to welcome you to Loma Negra fourth quarter and full year 2018 earnings conference call. As we begin my presentation with a discussion of the highlights of the quarter, and then Marcos will take you through our market review and financial result, afterwards I will provide our outlook for 2019. We will then open the call to your questions. Starting with Slide 3, we closed the year with another solid quarter in what has been a challenging year for our industry in Argentina. Importantly, we achieved despite a 16.3% year-on-year contraction in industry cement demand during the quarter. Our top line for the quarter increased by 2.8% year-on-year to almost Ps.7 billion, while 2018 turned out to be significantly different on the macro and FX fronts than what we expect at this time last year. We delivered increase in adjusted EBITDA of around 21%, achieving a margin expansion of 459 basis points. This is a testament to our continued effort on balance sheet growth and profitability. Our core Argentine Cement business remains the main driver behind this strong result, further supported by our operation in Paraguay. Let me also highlight the strong performance of our concrete segment which posted another quarter of record high volume, achieving in 2018 the record volume of more than 1 million cubic meters. Year-on-year however, our bottom line fell 29%, impacted by a negative variance in the income tax line, resulting from the tax reform approved in 2017. As you can see on the slide, measured in U.S. dollar and [indiscernible] in this quarter we achieved an adjusted EBITDA of $58 million, down only 15% year-on-year, despite the 18% contraction in the cement volume and the sharp peso depreciation. And Net majority income of $34 million versus $38 million a year ago, despite the strong devaluation experienced in 2018. Additionally our robust balance sheet with net debt to last 12 months EBITDA of 0.43 times provide us with a solid position to face the current volatility of the local financial markets. The expansion of our L'Amali plant is on schedule and continue to be a key element of our long-term strategy, which will continue to support production efficiency and profitability along with additional capacity when demand recovers. I will now hand off the call to Marcos Gradin. Please Marcos, go ahead.

Thank you, Sergio. Good day everyone. Turning to Slide 4, let me start by providing a quick overview of the macro environment and industry trends. We ended the year with an expected GDP for 2018 declining by 2.4%, slightly below consensus expectation at the time of our prior earnings call. Economist expectation and ours now call for a 1.3% contraction in GDP for this year, recovering gradually, reaching growth of 2.5% in 2020. Against this backdrop, and as anticipated we saw contraction in overall private construction activity in the quarter, particularly in November and December. This brought about in a 15.3% decline in industry segment sales for the quarter and a 2.6% year-on-year of construction for the full year. By contrast, bulk cement demand continues to gain traction during the quarter, supported by public infrastructure works, gaining share over total cement sales. Looking into 2019, we expect a negative cycle that began in the second quarter of 2018 to turn around by mid-year following consensus expectation of an overall macroeconomic recovery in Argentina. We see industry is having demand following these macro trends. While current public works are expected to continue moving ahead, particularly in the Buenos Aires metropolitan area, although facing tougher comps. For the full year, we expect an industry decline of a low single-digit. Now please turn to Slide 5 for a review of our top line performance by segment. Consolidated revenues were up 2.8% in the quarter and 7.9% for the full year, despite softer cement sales volumes. For the quarter, cement sales volumes in Argentina dropped 18% year-on-year impacted by overall weaker demand, thus revenue fell only by 6% year-on-year, partially offset by the healthy pricing environment. Paraguay, revenues were up 57%, driven by the strong recovery in sales volume experienced in the quarter, up…

Thanks Marcos. Now please turn to Slide 10. To wrap up this presentation, I would like to make a few final remarks. Despite the challenging macroeconomic environment in Argentina, we closed the year with another solid quarter. In particularly, our core Argentine cement business delivered both adjusted EBITDA growth and margin expansion, even with weaker volume demand in the country and we are also pleased to see that our concrete operation continuing to deliver a strong result, reaching record quarterly and annual volumes. Looking into 2019, we expect a turnaround in cement demand in Argentina and starting midyear following the economy environment, which is anticipated to begin to recover in the second half of the year. In this context, we remain focused on managing the business to deliver a strong result despite the macro environment. Our history and leadership position provide us with strong base to continue balance sheet growth and profitability. And part of our strategy is the expansion in L'Amali plant, which will allow us to continue delivering production efficiency and profitability, while will provide much needed capacity when demand recovers. This is the end of our prepared remarks. We are now ready to take questions. Operator, please open the call for questions.

We will now begin the question-and-answer session. [Operator Instructions] And our first question today comes from Dan McGoey with Citigroup. Please go ahead.

Great, thank you. Good morning gentlemen, congratulations on the results. First question I have is basically on the EBITDA margin expansion. I understand IAS 29 mostly affected depreciation, so therefore not EBITDA, but given the strength of the margin expansion, I'm wondering if you could comment whether the accounting change helped at all that margin, and assuming that the answer is quite little, I wonder if you could talk a little bit about how much of that expansion is related to the cost side of the equation. It should have cash cost per ton coming down either on the energy side or not or if it is mostly pricing? Let me stop there. Thanks.

Hi Dan, this is Marcos. The IAS 29 impacted negatively in our margins. Yes, it's impacted by 75 basis points, reducing our margin for the quarter on a consolidated basis.

Got it. So that margin expansion is primarily on the price front, the price increases. On cash cost production, is there anything that helped lower cash cost production in the period?

[Foreign Language] Good morning Dan. So, for the quarter, we have a double impact. On one hand the increase in prices and on the other, the price – the cost control for the company. [Foreign Language] So regarding cost, as we were talking in the previous calls, the lower volume has a benefit on the better logistics and the way we operate our plants. [Foreign Language] So another point is that in Argentina, we are having some improvements in tariffs both for electrical energy and thermal energy. [Foreign Language] Also the high volatility inflation and FX led us negotiate in a better way the other costs. [Foreign Language] And also we have an enhancement of our labor cost, both in amount and also in quantity of headcount. [Foreign Language] And the drop in volume and let us be more efficient in terms of logistics costs.

Great. Thank you. And one last follow-up. I don't have it at hand, but cash cost of production per ton, was it stable year-on-year or was it up but just considerably less than the price increase?

[Foreign Language] The cash cost year-over-year it – there is a reduction in dollars terms. [Foreign Language] The cost of our inputs, those are in dollars, they were reduced and of course the ones that are in pesos, they were also reduced, measured in dollars. [Foreign Language] And regarding the EBITDA per ton in U.S. dollars, it remained practically the same compared to the last year.

Understood. Great, thank you very much.

[Operator Instructions] And our next question comes from Alejandra Obregon from Morgan Stanley. Please go ahead.

Hi, good morning, and thank you for the call. My question is related to cement volumes in Argentina. Looks like your figures for the quarter came slightly below the industry average. So I was just trying to understand if this could be related to market share losses maybe or just exposure to an under-performing region. So any color on your granular performance by province perhaps would be great. Thank you.

[Foreign Language] Good morning Alejandra. Thank you for your questions. [Foreign Language] So last year when we take a look to the volumes of Loma Negra, it is important to bear in mind the price movements that we did. [Foreign Language] As we always mentioned, we are always the first mover and our competitors, they follow us a few days afterwards. [Foreign Language] That leads to the premium price to increase during that time where the competitors [Technical Difficulty] prices. [Foreign Language] So during those periods we tend to lose [Technical Difficulty] that we afterwards tend to recover. [Foreign Language] So with high inflation price increases are more often they tend to be every month and that [Technical Difficulty] this effect in market share is more permanent. There are other factors and it's also – there is also a difference within regions in the country. [Foreign Language] But our market share values for current and from last year make us feel comfortable in terms of our short-, medium- and long-term.

Thank you, this is very helpful. And a follow-up if I may. In terms of demand could you give us some color on what you've been seeing so far into the second quarter – into the first quarter, I'm sorry?

[Foreign Language] Things that we’re observing we need to keep in mind that last year until April, the demand was rather high. [Foreign Language] So it could be expected that until April the volumes should have a drop. [Foreign Language] However since mid-January the volumes that we are observing, they are slightly better than what previously expected. [Foreign Language] So as you could see from today's release, the February figures, they remain almost flat compared to last year. [Foreign Language] Therefore this value make us feel more confident that our expectation for the whole year should be something like a drop compared to – a slow drop compared to the previous year, for the full year.

Thank you very much. This was very helpful and congratulations on the results.

Thank you, Alejandra.

[Operator Instructions] And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Gaston Pinnel for any closing remarks.

Thank you for joining us today. We appreciate your interest in our Company and we look forward to meeting more of you over the coming months and providing financial and business updates next quarter. In the interim, the team remains available to answer any questions you may have. Thank you and enjoy the rest of your day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.