Cemex provides first quarter guidance

Cemex provides first quarter guidance
Published: 14 March 2008

Cemex SA said Thursday that it expects its first quarter sales to grow 24% YoY to US$5.3bn, thanks to its acquisition of Rinker.

"Despite the weakness in some of our major markets, our geographic diversification has helped partially mitigate the impact of those slowdowns, which will be somewhat offset by continuing strength in our Eastern Europe, South America and Australia businesses," the company said in a press release.

The company said its first quarter results will be affected by fewer business days, due to religious holidays.

Cemex said it expects its EBITDA, to increase 6% to US$920m for the quarter, while operating income is expected to fall 25% to US$420m.

"We maintain our full year guidance to generate ebitda and free cash flow after maintenance capital expenditures of about $5.6 billion and $3 billion, respectively, given the stronger exchange rate environment," the company’s chief financial officer, Rodrigo Trevino, said.

Trevino said Cemex should reach a net-debt-to-ebitda ratio of 3 times by the end of this year and of 2.7 times by mid-2009.

Cemex expects cement and ready-mix sales volumes in Mexico to fall by about 7% and 14%, respectively, compared to the first quarter of 2007.

Cemex said volumes have been negatively affected by a delay in infrastructure projects, which are expected to recover during the second half of the year, while the residential sector continues to grow.

Cement, ready-mix and aggregates volumes at its operations in the U.S. are expected to fall about 5%, increase about 33%, and increase about 115%, respectively, during the first quarter, Cemex said.

Cemex’s $15.3 billion buyout of Rinker last July expanded the company’s presence in the U.S., just as the housing industry slumped. However, Cemex earlier this month said that it has identified recurring cost synergies of about $400 million as it integrates Rinker, including $200 million this year.

Cemex attributed the decline in U.S. demand to the ongoing correction in the residential housing sector and bad weather in a number of states.

In Spain, cement and ready-mix volumes are expected to decrease by 15% and 13%, respectively, due to a slowdown in the residential housing sector.

In the U.K. Cemex said it expects cement volumes to decrease by 6%, ready-mix volumes to fall 11%, and aggregates volumes are expected to remain stable.