Cemex said Wednesday it has identified recurring cost synergies of about $400m as it integrates Rinker, which it bought last year for $15.3bn.
Cemex said in a press release that it expects to capture $200 million in synergies in 2008, and that the savings are well above the $130 million in three years that it had expected when it acquired Rinker.
Cemex bought Rinker, which has 80% of its operations in the U.S., as the U.S. housing market went into a slump, with declines more pronounced in regions where Cemex operates.
In December, the company said it was aiming for cost reductions of 10% globally, including an undetermined number of layoffs.
Cemex said capital expenditures of nearly $2.2bn in the past two years have increased cement capacity by 13.5Mt in Mexico, the U.S., Panama, Spain, and Latvia and that it’s raising cement-grinding capacity by 3.2Mt in Spain, the UK and the United Arab Emirates.
Cemex said it will use half of its estimated $3bn in free cash this year for investments aimed at growth and reiterated its confidence of lowering its net debt ratio to 2.7 times 12-months EBITDA, by mid 2009.