Cemex is concerned that its efforts to cut debt will mean sitting out the next round of industry consolidation.
“Our strategic position in the sector appears in my nightmares,” Fernando Gonzalez, chief of planning and finance, said in an interview with Bloomberg. “The largest players might grow faster than what we can do in the next five years, and that keeps me up.”
After a near-default on US$21.7bn in debt in 2009, any expansion will have to come through an investment fund in which Cemex will be a minority partner, rather than the direct purchaser, Gonzalez said.
Holcim and Lafarge may keep buying rivals as construction rebounds, said Gonzalo Fernandez, an analyst with Banco Santander SA. About US$21bn in cement-related acquisitions were announced globally in the 12 months ended June 8, almost three times as much as in the prior year, according to data compiled by Bloomberg.
“The main fear is letting good opportunities in good markets pass by,” Mexico City-based Fernandez said.
Cemex’s Gonzalez estimated that there is a potential for US$42bn of acquisitions worldwide in cement operations, the largest share of a possible US$70bn of deals in the global building-materials industry.
“Our competitors are nowadays in good shape, and I’m sure they have their plans to continue the growth process,” said Gonzalez, 55. “We know we have to keep the pace.”
He said Cemex’s investment fund, unveiled in April, may offer a way around the limits on acquisitions put in place by creditors after an agreement with banks in August to refinance about US$15bn in debt through 2014. The company sold shares and assets to reduce debt and adopted a cap of US$100m a year for acquisitions or joint ventures.