Cemex pulled down by US and Spain

Cemex pulled down by US and Spain
Published: 29 July 2009

Cemex’s first half results to not include the operations in Venezuela and the Canary Islands, which had been included last year and this has distorted the comparison for South America and Spain.  Certain other asset disposals have yet to be completed and, in some cases, are subject to dispute. 

Turnover in the first half declined by 33.1% to US$7,825.2m, while the EBITDA only did slightly worse with a 34.2% reduction to US$1,519.5m.  Equity shareholders’ funds at the end of June amounted to US$13,902.5m, a 15.7% reduction compared with the situation a year ago, while the gearing level, on the company’s definition, increased from 106.7% to 131.4%.  Cement shipments in the first half fell by 22.2% to 32.33Mt, with aggregates deliveries falling by 23.8% to 94.06Mt and ready-mixed concrete shipments dropping by 25.5% to 29.53Mm³.  

In Mexico, turnover fell by 18.4% to US$1,624.1m and the EBITDA was down by 18.9% to US$612.7m, though in local currency, and a comparable basis, increases of 8% and 7% respectively were recorded.  The domestic cement volume edged ahead by 1%, while the average cement price increased by 4% in local currency though it fell by some 21% in US dollar terms.  Ready-mixed concrete deliveries declined by around 2% while peso prices improved by 1%.  In aggregates, volumes rose by 17%, helped by increased public sector spending on the infrastructure, and prices improved by about 3%.  So while civil engineering activity improved, other segments of the Mexican construction industry saw a deterioration in trading conditions.

The United States turnover dropped by 41.0% to US$1,472.1m, while the EBITDA fell by 74.8% to US$102.2m and at the trading level, a US$52.2m profit was turned into a US$218.7m loss.  Cement shipments fell by 35% and prices declined by around 5% on average.  The aggregates tonnage fell by some 40% and prices were off by about 4%.  In ready-mixed concrete volumes dropped by 43% and prices were off by about 4%.  The expected benefit from federal government measures to boost the economy has yet to be seen and the effect is likely to be seen mainly next year.

The overall European turnover fell by 40.6% to US$2,521.9m with the EBITDA dropping by 59.3% to US$240.5m. Spain has been particularly badly affected as the inflated housebuilding market collapsed and pulled large parts of the commercial market down with it. The Spanish turnover dropped by 57.3% to US$419.2m and the EBITDA by 68.4% to US$92.41m. Cement shipments in Spain dropped by 48% after a 21% fall in the first half of last year, pulling average cement prices down by 7%, though in the second quarter this fall had increased to 10%.