Cemex’ margins decline

Cemex’ margins decline
Published: 30 January 2009

Cemex’ turnover was virtually unchanged (+0.1%) in dollar terms last year at US$21,688.5m, but increased slightly by 2.8% in peso terms.  The EBITDA declined by 5.3% to US$4,343.1m and the trading profit fell by 16.3% to US$2,486.7m.  The net interest charge rose by 18.7% to US$860.0m and, after taking into account losses on financial instruments of US$1353.1m and as very substantial rise in ’other’ expenses, the pre-tax result went from a US$2,770.5m profit in 2007 to a US$1,992.0m loss last year.  Helped by asset disposals, the net debt, on the company’s definition, declined by 5.3% to US$17,908m, giving a gearing level of 80.3% on that definition.  Capital expenditure was 3.1% higher at US$2,157m.    Cement shipments in 2008 declined by 10.2% to 78.46Mt and sales of aggregates and ready-mixed concrete deliveries were down by 4.1% to 77.26Mm³.  Thanks to a full year’s contribution from Rinker, the aggregates tonnage increased by 8.5% to 241.67Mt.

In Mexico, the turnover declined by 0.2% to US$3,821.9m, but the EBITDA did improve by 3.4% to US$1,452.6m in spite of an increasingly competitive market and margins recovered most of the reduction seen in the previous year to reach 38.0%.  Boosted by government spending on the infrastructure, civil engineering activity continued to increase, but most types of building activity declined in the face of increased economic uncertainty.  Domestic cement deliveries were down by around 4%, but the price improved by some 5% in local currency.  Ready-mixed concrete volumes fell by about 6%, though there was a slight improvement in the final quarter and prices strengthened about 4%.  Aggregates volumes rose by 14%, with average prices advancing by some 8%.

The US turnover declined by 4.7% to US$4,698.0m and the EBITDA dropped by 37.3% to US$702.0m, as demand weakened in all the group’s US markets.  At the trading level, the damage was more pronounced with a profit decline in the order of 96%.  Housebuilding continued to be the area worst hit, but with the weakening general economic outlook the order flow is declining across the private sector and only the public sector is showing increased demand.  Underlying cement shipments were down by 21% in the year, though the actual decline was limited to 14%, thanks to Rinker.  The average cement price achieved was down by 1%.  In ready-mixed concrete, deliveries fell by 30% on a comparative basis, and actual volumes were down by 13%.  The average price was off by 1%, in line with cement prices.  In aggregates, the inclusion of Rinker for the full period limited the volume decline to some 3%, but the underlying deliveries actually fell by about 30%.