Cementos Argos S.A.

Manuela Ramirez - Investor Relations, Managing Director Juan Esteban Calle - Chief Executive Officer Carlos Horacio Yusty - Vice President Financial and Shared Services Tomás Restrepo - Vice President Regional Colombia

Andres Soto - Santander Gordon Lee - BTG Lillian Stark - Morgan Stanley Francisco Suarez - Scotiabank Edgar Romero - BBVA Carlos Enrique Rodríguez - Credicorp

Thank you. Good morning and thank you for joining us for the Cementos Argos’ fourth quarter results.

On the call today are Juan Esteban Calle, our CEO; Carlos Yusty, our CFO; and Tomas Restrepo, the Vice President of the Colombian Regional Division. We have posted English and Spanish versions of the presentations and report at www.argos.co/ir.

We will upload the conference in audio format to our website. It is now my pleasure to turn the call over to Mr.

Calle.

Thank you, Manuela, and good morning, everyone. I would like to start our work fourth quarter conference call with our review of our noteworthy main achievements for the year.

In 2016, we continue consolidating our superior footprint and network in the U.S. through the acquisition of 2.2 million tons cement plant in Martinsburg, West Virginia and eight terminals, which we are started to consolidate in our financial statement in December.

The interconnection of our footprint will allow us to generate synergies of around $8 million per year. The strong fundamentals of the U.S.

and the stay recovery pace with its construction sector support our positive view on that market. After more than [indiscernible] since our first acquisition in that market, these divisions generated 50% of our revenues and 30% of the EBITDA in 2016.

We are proud of the footprint we have established in the U.S. our country with continuous promising opportunities in infrastructure where we operate as a local producer.

And another important milestone was the acceleration of BEST. Our efficiency plan that is stands for building efficiency and sustainability for tomorrow.

We defined an initial goal to reduce our cash cost per ton in Colombia by $6 has the initial step in closing the cost gap in that market. During the first six months of BEST, we achieved the following milestone.

We completed the transformation project of Sabanagrande and San Gil plants in Colombia and started the transformation of the kiln line in Cartagena. We announced our decision to postpone the 2.3 million tons expansion at our Sogamoso plant up instead to increase capacity by 1 million tons at the Rioclaro and Cartagena plants, using light and innovative technologies.

This new capacity will be added over the next two years at our CapEx below $120 per ton. Additionally the shared service center is started operations in November with expected savings of $3.5 million in 2017.

Finally last year we were selected as the industry’s most sustainable cement company by the Dow Jones Sustainability Index and received the Gold Class award at the RobecoSam Yearbook. We were also included in the FTSE4Good Emerging Index, recognized as one of the top companies.

We begin 2017 with optimism in all of our markets and a solid and well diversified footprint in the Americas. In the U.S.

we foresee continues recovery driven by the infrastructure and residential sectors. In Colombia we expect an improvement in volumes by the second half of the year derived from the construction of these 4G projects.

In Central American and the Caribbean we anticipated stable environment and the continuation of strong results. On Slide 5, we will discuss our consolidated results.

During the fourth quarter of 2016, our exposure to markets with different economic cycles enabled us to demonstrate resiliency in the mix of our challenging competitive environment in Colombia, with our sharing percent of our EBITDA coming from our operations outside of these countries. The U.S.

continued recovery trend with an expansion of more than 500 basis points on its EBITDA margin, the Central American and Caribbean division reported solid results driven by the healthy performance in Honduras, and positive dynamics in exports and trading. As part of our strategy to BEST non-core assets and focus on our building material business we divested most of our stake in Bancolombia.

Up to date we have reviews our holdings from almost 20 million ordinary shares equivalent to a 4% ownership of the bank to one million which corresponds to a 0.2% ownership. We remain committed to our goal of improving our return on capital employed.

As a consequence of the acceleration of BEST, we recorded a number of non-recurring charges that are affected our net income before taxes negatively or approximately COP 40 billion, in main charges are detailed in the presentation. On the next slide, our cement and ready-mix volumes decreased by 5.5% and 6.5% respectively during the fourth quarter.

Full year 2016 cement and ready mix volumes increased by 2.4% and 2.3%. We will explain in detail with non-supply markets in each region.

On Slide 8, we’ll review our regional analysis starting with a discussion of result in the U.S., our most relevant region in terms of revenues. The recovery in the U.S.

region continued in terms of volumes and profitability. Our, cement volume grew 13.6% in the quarter and 18.5% during 2016.

This compares well to a 7.9% increasing total volumes absurd for the year until November in the stage where we operate excluding Texas. Ready-mix volumes show slight decrease of 1.9% explained by a minor reduction in South Central region and a 3.4% growth in the South East.

Full year 2016 ready-mix volumes increased 2.9%. Regarding financial results revenues increased 10.9% and EBITDA increase over 80% higher volumes provided operational leverage driving the growth in EBITDA.

As a result the EBITDA margin was 12.9%, 500 basis points more than in the fourth quarter of 2015. Eliminating the effect of the consolidation of Martinsburg in December, the EBITDA for the quarter would have been $40 million with a margin of 11.9%.

For the full year 2016 total EBITDA in the U.S. was $181 million within our guidance of between one $150 million and $170 million.

Now in Slide 9, we will discuss the fundamentals of the U.S. market in which we are operating since last September under one consolidated entity Argos USA.

The residential market which has been the main driver for cement volume recovery continued with a strong performance, leading indicator such as housing starts and building permits recorded the highest level since 2008. A healthy labor market with an unemployment rate of 4.7% and an increase of 2.9% in wages, supports the fundamentals for the housing sector.

The U.S. is currently facing an infrastructure deficit which has cost the constant in terms of employment and disposal income.

As an example the The American Road and Transportation Association estimated that around 10% of bridges are considered structurally deficient. Moreover the American Society of Civil Engineers as estimated that the U.S.

requires investment of $3.3 in infrastructure until 2025. The new government has announced its intention to stimulate investment in infrastructure with $500 billion plan to be executed in five years.

Taken a conservative stand the Portland Cement Association estimate investments of $275 billion for the next five years, even under that scenario public construction is spending would be 20% higher than it was in 2016. If the plan is fulfilled, it will boost cement demand.

The PCA expect that infrastructure will start to accelerate in 2018 from an estimate of 3% growth in 2017 to a CAGR of 4% over the next four years based on the next four years. Based on historical figures we conclude that on average for every million dollars invested infrastructure consumes 2.5 times more cement than the residential sector.

Now moving on to Slide 11, we present our results for the Colombian division. The fourth quarter continues to be challenging overall for the cement industry.

Total cement dispatches reported by DANE increased by 9.5% as a consequence of the general reduction and consumption at the retail level and the late in the construction schedule or before the projects. Our volumes decreased more than the market it was due to higher exposure to infrastructure industrial segments of the market and decreasing volumes of imports during the first three quarters of the year as a result of excess capacity in the material volume basis and we historically low freights in the world.

As the leaders in infrastructure we expect to benefit from our gradual increasing demand of building materials from the 4G project starting in the second half of 2017. To date we have signed contracts to supply cement or ready-mix for a total of 40 functional events for the 1st and 2nd waves of the 4G program with continue advancing negotiation with concessionary levering on our strong value proposition and reputation in this segment.

Revenues and EBITDA were affected by lower volumes and an increase of 13% in the average price of cement during the quarter. The EBITDA was impacted by COP 18 billion in non-recurring expenses derived from severance payment and anticipated pensions as a result of the significant reduction in headcount.

During the fourth quarter, we continued advancing the execution of BEST in Colombia after terminating transformation of the Sabanagrande and San Gil plants. We continued with the Cartagena with in line and are carefully reviewing our opportunities to streamline our operations.

Our goal is to have the most efficient footprint in Colombia. Regarding our operations we’ll reduce our clinker-to-cement ratio for the General Use cement by 42 basis points.

We achieved an 11% use of alternative fuels in 2nd kiln of Rioclaro in December and launch the project to increase kiln substitution in our Cartagena plant. On Slide 12, we will discuss the key highlights from the Colombian market.

The construction sector is expected to remain driver of economic growth in 2017. The National Planning Department forecasted the 4G projects should contribute 2% to GDP growth over the next five years.

The fiscal performance of Colombia will improve with the recently approved tax reform. The increasing tax burden and the establishing the country’s storing credit rating, I keep practice for the funding and execution of infrastructure programs.

The reform will start to using the fiscal board for companies benefiting new capital investments and creating jobs. We reiterate our optimism for the infrastructure sector, configuring that more than 20 projects including the 1st and 2nd wave of the 4G as well as private sponsored PPP’s I would raise acute financial closings and a number of them have started construction including United States.

Additionally we are foreseeing opportunities from the government's plant improve rural growth as a key component of the Post Peace Agreement, it represent on 70% Colombia's total road network. Argos has developed by cost-efficient solution for rural growths called road binder, and we already executing some pilot projects in Antioquia with great success.

Finally, we are glad to see our recovery of the social housing sector in Bogota with an attractive pipeline of projects we had been boosted by the subsidies offered by the government. Moving to a next slide represent results for the Central America and Caribbean division.

Our cement volumes expanded 4.1% driven by Honduras trading an export which offset the performance in the rest of the region. In line with volume growth our revenues increased 5.7%.

The reported EBITDA it impacted by a one-time $20.4 million non-recurring income in Panama from the sale of real estate assets. Taking into account that in the fourth quarter of 2016 the EBITDA was impacted by $5.3 million non-deductible BIP related to a canal’s expansion the normalized EBITDA for the division grew 23% with a margin of 31.7%.

The impact of BEST is also reflected in our operational indicators in the region. In Honduras alternative new shares reached 26.7% energy consumption was 7% less than in 2015, as a consequence reported a 51% EBITDA margin.

In Panama the clinker-to-cement ratio declined 500 basis points and the cost per ton decreased by $3. To conclude the analysis of these regions on the Slide 15, we will discuss our outlook for Honduras and Panama.

Based on the World Bank's projections in 2017 the Panamanian and Honduran economies are expected to grow 5.4% and 3.5% well above the average in Latin America. The positive outlook for Honduras was confirmed by the region showing that issuance of $700 million with update to cover of more seven times.

The country has reduced its fiscal deficit from 7% three years ago to a positive balance in 2016. In Panama, the tax revenue increase by 9% in 2016 propel by the expansion of the canal.

The fiscal deficit has been reduced by 150 basis points for the last three years. Both countries have levered under positive fiscal fundamentals to promote important infrastructure projects.

Panama is developing attractive portfolios projects including two bridges over the canal if 2nd metro line at Colon City renovation and a Tocumen Airport expansion. In Honduras, the government has announced the construction of the Civic Center and the Palmerola International Airport, with investments of more than $380 million.

On Slide 17, we will discuss our debt level. At the end of 2016, our net debt to EBITDA plus dividends ratio on a pro forma basis was 3.81 times in line with the projections presented during our last conference call.

This ratio has been net effect of the bridge loan with JP Morgan to finance in Martinsburg acquisition of around $430 million and the pro forma EBITDA of the acquired assets. We are fully committed to continue divesting non-core assets to pay [ph] as soon as possible.

Up-to-date we sold most of our position in Bancolombia raising COP 492 billion. In Panama, we concluded the sale of our 20% stake of our cement and ready-mix operating company for $126 million as well as the sale of real estate assets for $30 million.

In Columbia, were moving ahead with the sale of our inside the fence power generation plants. In our region, we’re slated to sell between $30 million and $40 million in Northern Real Estate assets.

We expect to conclude these transactions in 2017 and return to our net debt to EBITDA plus dividend ratio of between 3.2 and 3.5. Finally, our interest expense coverage remain robust at were 4.4 times.

To conclude in this Slide 19, I want to share our outlook for 2017 and the strategic focus for the year. In Colombia, we expect our low single-digit growth for the market with an upturn once dispatches for these 4G projects start in the second half of the year.

Our emphasis will be on continuing the execution of best and regaining market share once infrastructure in the sales segments of the market pick-up demand, also after the successful implementation of alternative fuels into Rioclaro we have started to execute a similar project in Cartagena, which will start operations in the second semester of this year. In the U.S.

according to a PCA, the markets what Argos has presents and expected to grow 3%. The response senses that infrastructure will play a more important role going forward.

Our 2017 EBITDA guidance for these regions between $280 million and $300 million, a 60% growth compared with 2016. This positive estimate is based on volume and price recovery as well as the integration of the Martinsburg acquisition.

Overall, our guidance for our consolidated EBITDA is between COP 1.8 trillion and to COP 2 trillion and our CapEx of $280 million to $300 million. The guidance of CapEx includes $150 million to $170 million for maintenance and $90 million for commitments related with the Sogamoso project.

In my closing remarks, I would like to comment on the Honduras change. In Colombia, we have no contract to supply building materials to projects associated with this firm.

In Panama, we are suppliers of ready-mix for the 2nd metro line in which Honduras has a 60% stake and FTC construction has been remain 40%. With the 2nd metro line, exactly project for the CD of Panama and the government is fully committed to successful completion.

Finally, dispatch volumes for this project represented less than 1% of our total consolidated ready-mix volume in 2016 and the amount of receivable outstanding is around $2 million with our past due obligations. I now, would like to open the call for questions.

Thanks a lot.

Good morning, Juan Esteban. Thank you for the presentation.

My question is related to your guidance for 2017 and specifically on volumes in Colombia. I would like to have some more additional detail on how much of this is represented by 4G infrastructure, I understand that these are single - low single-digit will be not mainly driven by 4G projects.

Can you give us a specific figure that you are incorporating in your budget? And given, you already comment in another batch.

But in general, how confident are you feel about these demand coming alone in 2017 or you see a possibility of these being the late of 2018? Thank you.

Yeah. Thank you, Andres.

And we are expecting for the market in Colombia low single-digit growth more or less 350,000 and additional tons coming from the started construction for the project in the second half of the year. We are expecting to grow volumes in excess of the average to the market, because we are fully confident that we will start recover in market share.

Perfect. And then that note, can you give us an update on the competitive dynamics that you’re facing.

Can you - can we expect that this negative price performance is reaching a bottom now and we can see some improvement in prices in 2017?

We are not foreseeing price increases for 2017, but we are going - that we’re seeing a good dynamic in the market in terms of volumes in January and February of this year.

I when you mean positive dynamics you mean in terms of the market in general or your competitive position in the market?

In terms of the market in general, in terms of our competitive position in the market, both.

Perfect. Thank you very much.

Thank you, Andres.

Hi, good morning. Thank you very much.

Two quick questions. First, on the asset divestitures and the asset sales that you’re planning to do is part of the deleveraging program associated with the Martinsburg acquisition.

I was worrying if you could tell us - I mean you mentioned the two transactions, but and in amount how much you have already sold thus far or through the fourth quarter and how much would we expect to see during the course of 2017? And the second question, just in terms of your targets to reduce cash cost of production and improve efficiencies on the energy side.

I was wondering what level of energy prices is that consistent with, is that consistent with what we’re seeing now or are you assuming higher energy prices in that figure? Thank you.

Yeah, total divestment plan we are planning raise at least $500 million and we’ve already funded more or less $380 million, so we still have $120 million pending for 2017. And in terms of electricity prices in Colombia as we are completely sure we will be successful selling the cyber trends power generating plans, electricity prices in Colombia will increase marginal.

Thank you very much.

Not be significant, because they will still be inside the fence plant with PPA attached to them.

Perfect. Thank you.

Hi good morning and thank you for taking my question. The first one is a bit of a follow-up on the contradictions that you're aiming for Colombia.

Then a $6 per ton is that only for this year or you are envisioning that to take place over the course of several years? And then are a second question I had was regarding the sale as you speak in Bancolombia, do you think I mean in order to achieve the target that you're aiming for in terms of these $500 million of divestitures, would you still consider maybe selling a bit more of what you have in your equity stake?

The $6 target is just the starting point for this year. We have a competitive gap that we have estimated more or less between $15 and $20 per tons were $6 just the starting point.

And we will continue deploying our efficiency program until we closed that gap. In terms of selling more of our portfolio we have inconsistent in our answer that it will be sold at the right time and at the right price, it give us flexibility, but it is, I mean it is available to be solved once we have the right time and the right price.

But we have all the assets that contemplated in that $500 million figure.

Okay. And then if I have - may have an additional question.

Regarding on your guidance for the U.S. what sort of price increases are you envisioning in that guidance?

Mid single-digits in all our states.

Okay, perfect. Thank you very much.

Thanks a lot.

Hi good morning, thanks for the call. I have a question regarding Martinsburg acquisition.

Do you have any relevant update related to the financing of the transaction? Thank you.

Carlos you want to take that one.

All right. I wanted to mention we are now concentrated or focus in the areas to pay off the data that we take at the moment of the acquisition.

The transaction is fully financed that we are just executing the divestment plan. So we don't see I mean any issue paying of the price before the end of the year, fully paying depreciation.

Okay, thank you.

And the second question only a follow-up on a previous question on prices in Colombia. You said, you don't really envision a price increase throughout 2017 during the fusion competitive dynamics, but are prices in January and February lower than in December levels or they are somewhat flat.

That pretty much it from me? Thank you.

Daniel thank you for your question for played a big part in the dynamics of the Colombian market last year. Colombia imported more or less tow million equivalent tons of cement last year.

The good thing is that during the last quarter of 2016 imports decreased by almost 70% compared to the same period in 2015. So the reality is that at current price levels we haven't seen that in imports are decreasing in an important way.

And prices in January are similar to the prices that we had in December. So we are now lower than the prices in December of last year.

Perfect. Thank you.

Hi, thank you very much for the call, and good morning. Juan Calle, Carlos, Manu.

The question that I have on the rate on the divestments with Bancolombia, those shares were sold to the market or were sold to the Groupo.

Hi, Francisco, the shares were sold to the market.

Okay. Got it.

And lastly on the committed CapEx that you had in Sogamoso, can you just spend a little bit about that and more importantly if those $19 million that you have on budget made - may lead to efficiencies in Sogamoso this year?

I mean we have some commitments related to the plant and equipment that was constructed for the Sogamoso plant, so what we're doing is just paying the contracts and importing the equipment we will solve the equipment most likely in Sabanagrande. We would look or opportunities in all our geographies to use the equipment.

Got it. Thank you very much.

And the last question if I may on United States, I guess that your overall volumes in the United States may have some - I mean that the contribution that you had on marketing spend was that around 150,000 tons and also if you can actually disclose what levels of imports if any are consider in those volumes that you're reporting in the United States please.

In December volumes in Martinsburg were less than 100,000 tons.

Okay.

And last year we imported a little bit less than one million tons to the U.S. market.

Fantastic. Thank you so much.

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Good morning, thank you so much for the opportunity. Regarding cement and clinker interactivities, do you consider that now these margins are tight or maybe will continue as 2016?

And the second question was really answered. Thank you so much.

Yeah. I mean we consider that the current prices import of cement doesn’t make much sense.

And that is why we have seen volume decreasing in a considerable way is starting last quarter of last year.

Okay. Thanks so much.

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Hi, good morning, gentlemen. Thank you for conference call.

I just have one question especially on the $4 million in strategic CapEx. I want to know this $4 million are in order to increase the clinker ratio in Rioclaro and Cartagena, and if you could give us a little more detail how do you going to reach these one million tons and when we should expect that in 2017, 2018, 2019?

Thank you very much.

The one million additional tons are as scheduled for 2018 and it is using innovated technologies that will allow us to improve between clinker-to-cement ratio and our expansion will be mainly in Rioclaro and Cartagena.

Great. Thank you very much.

Thank you, Carlos.

Hi. Good morning, ladies and gentlemen.

Thank you for taking my question. I would just like to know is, you could share with us the EBITDA that you expect from Martinsburg in 2017 what’s implied in your EBITDA guidance range and also just what exchange rate as you’re using for the Colombian peso?

Thank you.

Yeah. The EBITDA that we are expecting for Martinsburg in 2017 is between $60 million and $70 million.

And can you please repeat your second question?

Sure. Just in the consolidated EBITDA guidance.

What exchange rate are you using for the Colombian peso?

We are using COP 2950 pesos per dollar.

Great. Thank you very much.

Okay. Thanks a lot to joining to our conference call and looking forward to speaking to you soon.

Thank you very much.