Cemex trading profit halved in 2009

Cemex trading profit halved in 2009
Published: 29 January 2010

Cemex 2009 turnover dropped by 27.8% to US$14,544.2m, which represents a 19% reduction on a comparable basis, allowing for divestments. In peso terms, the turnover was down by 12.3%. A substantial part of the sales decline can be attributed to lower volumes and prices in the USA and in Spain. EBITDA fell by 34.9% to US$2657m and the trading profit halved to US$1164.8m.

The net interest charge was 9.2% higher at US$993.6m, but a reduction in ’other’ expenses enabled the pre-tax loss to be reduced 83.3% to US$352.5m. Helped by the further asset disposals during the year, the net debt, on the company’s definition, was reduced 16.2% to US$15,053m, giving a gearing level of 92.7%. Capital expenditure was 69.2% lower at US$643m. Group cement shipments fell 17.1% to 65.05Mt, while and sales of aggregates were down 20.7% to 167.95Mt and ready-mixed concrete deliveries dropped 30.2% to 53.92Mm³. 



The Mexican turnover fell 18.5% to US$3113.9m and the EBITDA was off by 20.2% to US$1159.7m, though on an underlying basis the decline was a much more modest 3%. Mexican EBITDA margins declined from 38% to 37.3%, but still remain the highest in the group. Domestic cement were down 4% in the year, but the completion of infrastructure projects and weak building demand saw fourth quarter volumes fall 10%.

Turnover in the USA fell 39.9% to US$2,825.3m and the EBITDA dropped 79.7% to US$142.80m, while a US$456.6m loss was incurred at the trading level against a modest profit in the previous year. Volumes were down in all the group’s US markets and prices in many of them. Cement deliveries fell 32% in the year, while average prices declined by around 6%. Deliveries of aggregates dropped 38% and the average price achieved showed a 7% reduction, while in ready-mixed concrete, the volume reduction as 38% and prices deteriorated by a further 8%.

Across Europe, turnover fell 30% to US$5359.5m and EBITDA more than halved, falling 50.4% to US$595.9m.

Spanish turnover decreased by a further 47.1% to US$831.1m, having fallen 25.8% in the previous year, and EBITDA dropped by a further 56% to US$204.2m. Spanish cement deliveries collapsed by 40% on top of the 30% reduction in the previous year, with cement prices falling 10% in an over-supplied market, with the fourth quarter showing a 14% price reduction. The aggregates volume dipped 33%, though prices did improve by 3% as supplies were cut back by most market participants. In ready-mixed concrete deliveries dropped 44% and prices fell 8% in local currency terms.

 In Great Britain, the turnover fell 30.8% to US$1184m, but at the profit level there was at last an improvement, with the EBITDA recovering by 62.2% to US$42.8m, which is hopelessly inadequate, bearing in mind that a trading loss of US$62.7m was still being incurred.

In the rest of Europe, turnover declined 23.4% to US$3344.5m and the EBITDA fell 34.4% to US$348.9m. The amount of cement sold fell by 17%. The German domestic cement deliveries declined 18% and the outlook for construction demand remains weak, though the housing market appears to have bottomed. A new cement works and transport facilities were commissioned in Latvia, but the proposed sale of the businesses in Austria and Hungary has yet to materialise. 



In Africa and the Middle East, the turnover was down 2.1% at US$1048.7m but the EBITDA improved by 12.3% to US$332.8m. While cement shipments in domestic markets improved by around 22%, volumes declined 10% in aggregates and by 14% in ready-mixed concrete. This reflects the different geography of the various product categories, with cement being a major contributor in Egypt, but being absent in Israel, which is being driven entirely by downstream operations. Egypt is the largest single contributor and cement deliveries there rose by 13%.