Cemex has reported mixed first quarter results. Sales beat expectations but the net income amounted to a loss of US$276m for the quarter, versus a loss of US$342m in the same period a year earlier, and free cash flow was negative on higher financial expenses.
Cemex’ first quarter turnover advanced by 11.2%, or an underlying 9%, to US$3,384.1m and the EBITDA edged ahead by 0.7% to US$518.2m. The trading profit, however, recovered by 16.1% to US$172.3m after the 50.3% drop a year ago. After net interest charges 9.1% higher at US$336.3m and other financial items, the pre-tax loss was reduced by 25.8% to US$172.1m. The net debt was 2.3% lower than a year earlier at US$17,575m, though 3.1% higher than at the end of last year. Equity shareholders’ funds were 1.0% lower at US$15,952.2m to give a gearing level of 110.2%. 51% of the debt was at fixed rates with 73% of the debt being in US dollars, 23% in euros and 4% in Mexican pesos.
Cement shipments in the first quarter were 5.6% higher at 15.27m tonnes, with aggregates production being 8.2% higher at 35.17m tonnes and ready-mixed concrete deliveries rising by 14.2% to 12.28m m³. Volumes were generally higher in Mexico and in Europe, but lower in the United States of America. The usage of alternative fuels, which stood at 20.3% last year, is expected to rise to some 25% this year and the aim is to get to 35% in 2015.
Fernando González, Executive Vice President of Finance and Administration, commented on the results: “Despite the still lingering effects of the economic downturn in a number of our key geographies, we are encouraged by the stabilization of important indicators in the construction materials business. Consolidated domestic gray cement and aggregates volumes showed growth for the first time since the first quarter of 2007. We are pleased with the trend we have seen in our quarterly sales because this is the seventh consecutive quarter of top-line recovery in our results. And, as a result of our financial strategy, we have eliminated our refinancing risk until December of 2013.”
Mexican turnover rose by 13.6% to US$842.2m and the EBITDA improved by 13.1% to US$291.8m, while the trading profit advanced by 15.9% to US$256.0m. Domestic cement deliveries were 1% higher in the quarter. Average cement prices were ahead by around 5% in local currency, and improved by approximately 11% in US dollar terms.
The US turnover has continued to decline and fell by a further 8.2% to US$506.6m. The loss at the EBITDA level was more than doubled to US$23.4m (+105.0%) and the trading loss increased by 5.7% to US$191.0m as weather conditions were unfavourable. Cemex’ US cement volumes declined by a further 4%, and prices were off by a further 3%, but price increases are now beginning stick.
In Europe, turnover rose by 23.6% to US$1,170.6m, helped by less unfavourable weather conditions than in the previous year in most countries and the EBITDA went from a US$0.9m loss in 2010 to a US$49.7m profit, while at the trading level the seasonal loss was reduced by 62.3% to US$30.9m.
In South America, Central America and the Caribbean, turnover advanced by 7.9% to US$396.4m, but the EBITDA declined by 7.6% to US$116.7m and the trading profit fell by 9.6% to US$97.7m. Cement volumes improved by 4% and prices by 1% in local currency and by 3% in US dollar.
Turnover in Africa and the Middle East was affected by the unrest in Egypt, Cemex’ most important market in this region and the turnover declined by 5.8% to US$248.4m and the EBITDA was off by 4.3% to US$79.9m and the trading profit by just 2.5% to US$68.9m. Domestic cement deliveries in the region were off by 7% and prices by 2% in local currency. In Egypt, volumes declined by 6% in cement, by 28% in aggregates and by 26% in ready-mixed concrete.
Asian turnover was off by 2.3% to US$121.7m, while the EBITDA fell by 35.9% to US$21.1m and the trading profit by 43.9% to US$15.6m.
Overall Cemex is positive on future market growth: "I believe that we have turned the corner in most of our markets, which are now growing," said Mr Gonzalez. Management expects cement volumes to show low-to-mid single digit percentage growth in 2011.