Good morning, and welcome to the Loma Negra third quarter 2020 conference call and webcast. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Also, Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Gastón Pinnel, head of IR. Please, Gastón, go ahead.
Thank you. Good morning, and welcome to our third quarter 2020 earnings release conference call. Above all, we hope you and your families are safe and well. By now, everyone should have access to our earnings press release and the presentation for today's call, both of which were distributed yesterday after market close. Joining me on the call this morning will be Sergio Faifman, our CEO and Vice President of the board of directors, and our CFO, Marcos Gradin. Both of them 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. 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.
This conference call will also include discussion on non-GAAP financial measures. The full reconciliation to the corresponding financial measures is included in the earnings press release. Now, I would like to turn the call over to Sergio. Please, Sergio, go ahead.
Thank you, Gastón. Hello, everyone, and thank you for joining us today. First, I hope you and your family are safe and well. I am going to mention a few highlights of the third quarter, and then Marcos will walk you through our market review and financial results. After that, I will provide some final remarks and then we will open the call to your questions. I would like to begin by thanking all our people and stakeholders, without whom this set of solid results would have been very difficult, particularly during these unprecedented times. During the third quarter, we achieved very important results with EBITDA growth and margin expansion. The recovery pathway of cement dispatch was considered as we experienced a very strong sequential growth in every region of the country, an overall volume increase of almost 3% in year-on-year basis.
As observed in previous quarter, the reason behind this rebound was the bulk cement driven mainly by residential demand. On the contrary, the delay in large private and public works execution is preventing the bulk cement to start its recovery and also harming our Concrete and Aggregates business. Our adjusted EBITDA stood at ARS 48 million, with an expansion of 9.4% in the quarter compared to the same quarter last year. As we remain diligent on our operation, enabled to recover sale volume while improving our EBITDA margin by 454 basis points to 31.5%. Additionally, during the quarter, we decided to execute the sale of our 51% stake in the Paraguayan company, Yguazú Cementos. This was an excellent deal in terms of value generation and timing, with an implied multiple of approximately 9x last 12 months EBITDA.
As our country and the world continue to battle the COVID-19 pandemic, economic activity remains weak and uncertainty high. Lockdowns are less restrictive and more sectors are operational, which is expected to bring additional dynamics to the economy as a whole. As a key element of our long-term strategy, L'Amalí Expansion Project is right on track, expecting it to be inaugurated by the beginning of 2021. I will now hand off the call to Marcos Gradin, who will walk you through our market review and financial results. Please, Marcos, go ahead.
Thank you, Sergio. Good day, everyone. As you can see on slide five, we are leaving behind the bottom levels of the second quarter, where the GDP recorded a fierce drop of 19%. Auspiciously, the construction sector continues the sequential recovery started in May. In particular, the cement sector is experiencing a more vigorous rebound. After 14 months of year-on-year decline, September was the first month in recording a positive 10.5% growth. The main drivers behind this trend is bulk cement sales, which is explained by a surge in self-construction and retail demand. This segment grew around 18% in the third quarter relative to the same quarter in 2019, and also posted in September a historic record. A similar trend was also observed in October with a 12.8% year-on-year growth for the industry.
By contrast, during this quarter, bulk segment, together with Concrete and Aggregates, continued to suffer the most, hampered by the halt in infrastructure works as the construction cooperates combines with the economic uncertainty. Unsurprisingly, the share of cement sold in bag increased by almost 14 percentage points from 58% in third quarter 2019 to more than 72% in third quarter 2020. We expect this breakdown to remain rather stable in the following months. Eventually, bag demand would catch up as more restrictions are lifted or larger private and public works are going to gain some momentum. Definitely, the economy as a whole is yet far from turning around, and Argentina still faces different tests, particularly on the macroeconomic outlook. Expectation of our GDP growth for 2020 revolved around a double-digit decline. In this sense, we watch carefully the vigor of different economic sector as they are reopening for business.
Turning to slide five for a review of our top-line performance by segment. While consolidated revenues dropped 4.5%, revenues of our core business cement, masonry, and lime was up 5.3%, with sales volumes increasing by 2.9% year-on-year and favorable pricing environment. As mentioned before, bagged cement continues to be the driver behind this vigorously rebound, growing in this quarter around 23% compared to the same quarter last year. Revenues from our railroad segment decreased 29.8% year-on-year, with volume drop of 5.8%, further impacted by the change in products mix, namely a drop in transported building materials and frac sand, partially compensated by other services rendered. Revenues of concrete and aggregates are still the most hampered by the halt in public and private projects, plummeting 70.2% and 25.2% respectively. Moving on to slide six.
Consolidated gross profit for the quarter increased by 3.9% year on year, and margin expanded by 225 basis points, explained by our core business. In particular, the recovery of revenues of the bagged segment with good cost performance, especially in energy inputs and lighter fixed cost structure, which reflects footprint adequacy efforts achieved last year. Energy inputs benefit from earlier prices renegotiations, together with improvements in unitary energy consumptions. SG&A expenses as a percentage of revenues increased by 67 basis points to 7.7% from 7%, mainly due to higher percentage of bagged cement sales. Please turn to slide seven. Our adjusted EBITDA was up 11.6% in this quarter, reaching ARS 48 million, and consolidated EBITDA margin expanded by 454 basis points to 31.5%, thanks to margin expansion in our core business segment, cement, masonry cement, and lime.
Adjusted EBITDA margin in this segment expanded by 472 basis points to 34.3% as bagged volumes recovery, coupled with significant reduction in energy input costs, a good pricing performance allow us to outperform previous year quarter. Rail adjusted EBITDA margin worsened to 6.3% from 14%, impacted by lower volumes and cost decline in less than proportional. Concrete and Aggregates posted a negative ARS 58 million and negative ARS 42 million, respectively, as they remain severely affected by the limited to execution of larger public and private works. EBITDA in USD per ton stood at $32, increasing around 16% compared with the same period last year and above 21% in a sequential basis versus second quarter this year. Moving on to the bottom line on slide eight, net income for the quarter stood at ARS 6.4 billion, or $113 million.
This figure includes ARS 4.2 billion of income from discontinued operations in Paraguay. Income from continuing operations were ARS 2.2 billion, comparing to a loss of ARS 180 million, mostly explained by a positive impact of exchange rate difference and adjusted EBITDA expansion, partially offset by impairment of assets in other segments. As a consequence of the change in business perspectives, we registered a non-cash impairment loss of approximately ARS 851 million, from which the biggest stake is the impairment on railway that amounted ARS 705 million and the remaining on Aggregates. Finally, net income was also affected by a charge of ARS 363 million related to the cash contribution done in Ferrosur Roca to repay existing debt. Measured in U.S. dollar, our net income reached $113 million U.S. dollars in the quarter from a loss of $12 million in the year-ago quarter.
Moving on to the balance sheet, as you can see on slide nine, as previously mentioned, during the quarter, we executed the sale of our Paraguayan operation, resulting in an excellent value creation opportunity for the company. The proceeds from the sales were mainly dedicated to the debt repayment and the distribution of an extraordinary dividend of approximately $31 million US, which was performed in October 2020. Additionally, this transaction, together with our positive operating cash flow of ARS 3.4 billion, enabled us to face capital expenditure payments of ARS 1.6 billion, 69% of which was dedicated to the expansion project, and to repay ARS 8.9 billion of borrowings, ending the quarter with a total cash position of ARS 4.7 billion, with manageable short-term debt maturities of ARS 3.9 billion.
At the end of this quarter, our net debt was reduced to $19 million, and our net debt to EBITDA ratio was 0.12x from 1.17x in the second quarter this year. Now, for our final remarks, I would like to hand the call back to Sergio.
Thanks, Marcos. To wrap up the presentation, I please ask you to turn to slide 10. We proved resilient to these challenging times, and we are pleased to communicate these achievements. Our effort and adaptability to unknown worlds translate to our results. Once again, delivery margin and EBITDA growth. The initial recovery of cement demand observed at the end of the second quarter was confirmed during the last month. We are glad that cement reached record high volume. We expect this improvement to continue. At some point in time, major private and public infrastructure works should resume, reinforcing these positive trends. Certainly, the economy as a whole is yet far from turning around, and Argentina still face different challenges, particularly on the macroeconomics perspectives.
In this sense, we watch carefully the dynamics of different economic sector as they are reopening for business and how this could affect our own sector. We executed firmly on the sale of our Paraguayan operation. We considered it was an excellent deal in terms of timing and value generation. We optimized the proceeds from the transaction, creating value for our shareholders at the time we strengthen our already robust financial situation. We are now concentrating all our effort in Argentina. In that line, we thought we keep the pace on the execution of L'Amalí expansion project, which is planning to be ready by the beginning of 2021. Once again, I would like to thank our own people and stakeholders without whom this above-mentioned result would have been impossible, especially during these unpleasant times.
Let's keep moving forward with the same responsibility and the thoughtfulness we have shown so far. United, we are able to overcome any challenges and grasp every opportunity on our way. We are now ready to take questions. Operator, please open the call for questions.
Thank you. We will now conduct a question- and- answer session. If you would like to ask a question, please press star then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star then two if you would like to remove from the line. For participants using speaker equipment, it may be necessary to pick up your handset prior to pressing the keys. Once again, star one on your telephone keypad. We would like to ask that you please limit your questions to one question and one follow-up, please. If you have additional questions, you may re-queue to those questions, and then they will be addressed. Please note that Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster.
Our first question is from Alejandra Obregon from Morgan Stanley. Go ahead.
Hi. Good morning, and thank you for taking my question. I actually only have one. If you could please elaborate on your utilization rates across the different regions or assets and whether you are optimistic of getting more pricing power in the next months. Thank you.
Good morning, Alejandra. Thank you for your question.
The utilization rate in the plants, it depends on a monthly basis, and it's currently approximately 90% of its utilization. It is hard to talk about utilization rate because in these months of September, October, and November, we are usually with a higher demand.
If we take a look to the clinker capacity utilization, we should be around 80%.
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In these last months, due to the bagged cement recovery, we do have more utilization rates in the bagging and dispatching sectors.
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For the coming months, we are optimistic about the volumes.
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We also think that it could be a slight decrease in the bagged cement and most probably a recovery on the bulk, because it's the one lagging behind.
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Importantly, to remark that the large infrastructure projects, not only in the metropolitan area of Buenos Aires, but also in the rest of the country, has been virtually nonexistent.
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For the last time, there has been some news about some infrastructure projects that are starting in the near future.
Thank you. Maybe a follow-up here. Is it fair to assume that the retail demand or the strength that we've seen in the retail demand is coming from the Buenos Aires area, or is there any other region that has outperformed as well?
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No, actually, demand is quite stable along the country.
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In the metropolitan area, the bulk cement was more affected due to the lockdown restrictions.
Understood. Thank you very much.
Thank you.
Our next question is from Coleman Clyde from HSBC. Go ahead.
Hi, gentlemen. Thank you for taking my question. I just have two really quick ones. My first one is on margins. I'm just wondering what your more medium-term outlook is for margins in light of the fact that the L'Amalí plant expansion is going to come online next year. I know that you were initially expecting to see some improvements from that plant, but we've already seen some pretty big improvements on the margin fronts. Are you still expecting to see further improvements? What's your more medium-term outlook on that front? The second question would be in light of the sale of your assets in Paraguay, could you envision a scenario in the future where you pursued assets outside of Argentina again? Those would be my two questions.
Good morning, Coleman. Thank you for your questions.
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Regarding margins, with L'Amalí expansion, we should have margin improvements.
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This margin improvement will not be next year due to the ramp up in the plant should also have a ramp up in the margin improvement.
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Additionally, there are two other things. One is the thermal energy costs.
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Due to the savings that we observed recently, the savings with L'Amalí should be less than what we had expected.
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The other factor has to do with the volumes, and the size of L'Amalí. Once we are ramping up production in that plant, we should also be diluting fixed costs.
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Regarding Paraguay.
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Regarding Paraguay, we believe that the sale proves the capacity of the company to develop a project and then to sell it with the right timing and value generation.
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At this moment, in the board of directors, in the finance committee, we are revising and reviewing the strategy for the next five years.
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In this strategic plan, we are not discarding any alternative. It could be growth in Argentina, either vertical integration or also abroad in other geographies.
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As of today, we do not have any decision made about these future steps.
Thank you very much. Very clear.
Thank you.
Our next question is from Eric Neguelouart from Bank of America. Go ahead.
Yes, thank you. Good morning. I would just like to know if you have some more color on the stimulus program that were announced by the government earlier this year. Just anything you could comment. Thank you.
Sorry, Eric. Could you repeat your question? We didn't get it, actually.
Okay. Can you hear me there?
Yes. Now it's better.
Okay. Any color you could give us on the stimulus package announced by the government earlier this year? Have those projects started, or are they going to start anywhere in the near future? Just any color you can give us would be good. Thank you.
Thank you, Eric. [Non-English content]
The governmental plans that we have knowledge about are focused on housing adequacy. Sewages, houses, and roads.
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We believe that with the approval of the budget 2021 this week, we should have a better outlook for these plans.
Thank you.
This concludes our question- and- answer session. I would like to turn the conference back over to Gastón Pinnel for closing remarks.
Thank you for joining us today. We appreciate your participation and 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 meantime, the team remains available to answer any questions that you may have. Thanks again, and stay safe.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.