Cemex posts a US$182m first quarter loss

Cemex posts a US$182m first quarter loss
Published: 30 April 2009

Cemex’ first quarter turnover fell by 32.2% to US$3,660.1m, in part reflecting disposals and, on an underlying basis, the turnover declined by some 15%.  The actual EBITDA was down by 25.1% to US$712.2m, but after taking divestments and currency movements into account, the underlying reduction was a mere 3%.  At the trading profit level, there was a 29.4% reduction to US$325.7m, while after charging interest and losses on exchange rates and on financial instruments, a the pre-tax loss of US$181.8m was incurred, compared with a US$564.2m profit in the previous first quarter.  Equity shareholders’ funds declined by 14.8% to US$13,406.4m to give a gearing level of 134.5%.  Cemex has announced that it has identified a further US$200m of cost savings, taking the total amount of envisaged cost savings, expected to be realised since the beginning of 2008, to an estimated US$900m  

First quarter cement shipments declined by 22.1% to 15.15m tonnes compared with a 5.3% reduction in the same period last year.

The Mexican turnover was down by 15.4% to US$774.7m and the EBITDA declined by 16.8% to US$288.0m.  Mexico, which has always been the major source of profit, regained its position as the largest source of revenue as well, thanks to the drop in the United States.  Increased spending by federal and local governments have offset much of the reduced private sector investment in housebuilding and in commercial and industrial projects.  Domestic cement deliveries improved by around 3% on the weak start to the previous year, when deliveries dropped by 7%.  Average cement prices improved by some 3% in local currency, but dropped by about 24% in US dollars.

The US turnover fell by 39.1% to US$726.2m and the EBITDA collapsed by 80.4% to US$32.3m as not only housebuilding, but also industrial and commercial building activity were hit by the recession.  As far as civil engineering is concerned, the economic stimulus programme recently approved by Congress has yet to take effect.  The group’s US cement volumes declined by 33% in the first quarter and cement prices were off by some 5%.

Driven lower in particular by the drop in demand in Spain, but also elsewhere and additionally affected by a harsher winter, the overall European turnover shrunk by 45.7% to US$1,071.3m and the EBITDA dropped 81.5% to US$42.1m.  Spain, which previously had been the largest source of European turnover saw revenue drop by 61.5% to US$199.2m and the EBITDA fell by 75.8% to €37.9m.  Domestic cement deliveries dropped by approximately 52%, or by 48% adjusting for the sale of the operations in the Canary Islands to Cimpor.  The average cement price was down by about 4%.  In aggregates, first quarter prices did improve by 3% but volumes dropped by 47%, while in ready-mixed concrete volumes fell by 55% and prices eased by an average 3%.  In Great Britain the turnover fell by 42.0% to US$266.7m, but after adjusting for disposals and the drop in sterling, the underlying reduction was more like 21%.  The impact on the profit line was less dramatic with a 10.0% reduction to US$6.6m, but the profitability of the British operations have been very disappointing for some time.  Cement deliveries fell by 22% in the first quarter, but the average price improved by 11% in local currency

In the rest of Europe, cement shipments, in particular, were affected by a much colder winter and cement shipments were some 34% down, while volumes in aggregates and ready-mixed concrete were down by 20% and 24% respectively.  The winder weaker effect on cement volumes was particularly noticeable in Germany and Poland.  In Germany, domestic cement deliveries were down by a quarter and exports were more affected, but cement prices did rise by 8% with German prices still remaining low by European standards.   In France, aggregates deliveries fell by 22%, with ready-mixed concrete shipments declining by 18%.  In both categories prices were raided by some 5%.