Loma Negra Compañía Industrial Argentina Sociedad Anónima (LOMA) Cash Flow Statement

The extreme volatility in the OCF/NI ratio, from -56.05 in 2025Q2 to 8.94 in 2025Q4, suggests that reported net income is heavily influenced by non-cash IAS 29 adjustments, such as monetary gains or losses, rather than underlying operational performance. In 2026Q2, OCF/NI improved to 2.42, but this still reflects a significant gap between net income of $7.5B and operating cash flow of $18.1B, implying that earnings quality remains questionable. Investors should monitor whether the company can sustain positive cash conversion without relying on favorable working capital swings, as the negative working capital changes in several quarters indicate that cash flow is being supported by timing effects rather than core profitability.

The free cash flow trajectory shows a sharp recovery from the -$40.3B in 2025Q2 to $35.7B in 2025Q4, driven by a large positive working capital swing of $21.1B, which may not be repeatable. In 2026, FCF margins have compressed to around 3.5%, well below the 15.7% seen in 2025Q4, indicating that the company is generating only modest cash returns relative to revenue. Compared to peers like CEMEX with a 10.7% FCF margin, Loma Negra's current FCF generation appears weak, and the gap between net income and FCF suggests that reported earnings are not translating into cash at a comparable rate.

The CapEx/Revenue ratio has increased from 7.7% in 2024Q1 to 10.3% in 2025Q4, indicating that Loma Negra is investing heavily in fixed assets, likely to maintain its competitive position in the Argentine cement market. However, given the hyperinflationary environment, these nominal increases may not represent real expansion, and the company may be spending more just to replace depreciating assets. The elevated capital intensity, combined with compressed margins, suggests that the company's ability to generate excess cash after maintenance capex is limited, which could constrain future dividend payments or debt reduction.

The working capital changes show a pattern of large negative adjustments in early quarters, such as -$36.4B in 2024Q1 and -$30.3B in 2025Q1, followed by a positive swing in 2025Q4. This suggests that the company is experiencing significant cash outflows to fund receivables and inventory, likely due to inflationary cost increases and delayed customer payments. The positive swing in 2025Q4 may indicate a one-time collection or inventory reduction, but the recurrence of negative changes in 2026Q1 and 2026Q2 implies that working capital continues to be a drag on cash flow. Investors should monitor whether management can improve working capital efficiency, as the current volatility adds uncertainty to cash flow forecasts.

The cash flow data shows that Loma Negra has returned almost no capital to shareholders, with dividends of only $1.1M in 2025Q4 and $2.0M in 2025Q3, and buybacks of $646M in 2024Q1 but nothing since. This suggests that management is retaining all cash for operational needs or debt reduction, possibly due to the financial pressures of its parent, InterCement. The lack of shareholder returns, combined with high capital expenditures, indicates that the company is prioritizing reinvestment over distribution, which may be prudent in a hyperinflationary environment but could disappoint income-focused investors.

The cumulative gap between net income and operating cash flow is substantial, indicating that a significant portion of reported earnings is non-cash or tied up in working capital. This divergence is likely driven by hyperinflationary accounting adjustments, such as monetary gains, which inflate net income without corresponding cash inflows. The negative working capital changes in many quarters further exacerbate the gap, as cash is being consumed to fund receivables and inventory. Investors should be cautious in relying on net income as a measure of cash-generating ability, and instead focus on operating cash flow trends, which have been more volatile and less robust than earnings suggest.