Rinker boosts Cemex volumes

Rinker boosts Cemex volumes
Published: 29 October 2007

For the first nine months 2007, which included Rinker for three months, Cemex has reported at 16.2% increase in turnover to US$15,595.3m.  Margins, however, deteriorated and the EBITDA was ahead by a more modest 9.6% at US$3,421.3m and the pre-tax profit actually declined by 5.0% to US$2,197.5m.  As minorities increased by one fifth, the net profit fell by 6.6% to US$1,820.5m.  The net debt, on the company’s definition, more than doubled from US$7,144m to US$19,156m to give a gearing level of 99.9%.  The higher indebtedness largely reflects the acquisition of Rinker and this is expected to be reduced with the help of the disposals to CRH that are currently being negotiated. 
Mexico remained the largest source of profit, accounting for 28.7% of EBITDA, ahead of Europe with 26.0% and the United States with 23.2%.  Cement shipments in the period increased by 2.1% to 66.08m tonnes, while ready-mixed concrete deliveries were 6.1% higher at 58.80m m³ and the aggregates tonnage rose by 25.3% to 155.55m tonnes, with the downstream activities having been substantially boosted by the Rinker deal.
Mexican turnover increased by 7.8% to US$2,842.8m as construction activity remained healthy, but some increase in capacity has affected prices which, in current peso terms, declined by 3% in the past quarter and by 1% in the year to date.  The EBITDA improved by 2.4% to US$1,037.1m.  Domestic cement deliveries were up by around 5% with cement prices some 5% higher in US dollar terms, but down by 1% in constant peso terms. Ready-mixed concrete deliveries rose by 9% with constant peso prices being an average 2% higher and aggregates shipments advanced strongly by 70% and prices rose by a quarter in constant peso terms.     
In the USA cement demand was depressed by the severe housebuilding recession and underlying cement shipments fell by 18%, though the drop in group volumes was limited to some 9% thanks to the initial consolidation of Rinker.  US cement prices, however, continued to improve and rose by an average 5%.  Ready-mixed concrete deliveries fell by 21% on a comparative basis, with prices edging up by 2% as higher cement prices worked their way through the system. In aggregates, the 12% underlying decline was turned into a 48% increase as a result of taking Rinker on board and the average price showed a 6% increase.   The US turnover emerged 7% higher at US$3,474.6m, with a 57% boost in the third quarter as Rinker was added, while the EBITDA was 12.2% lower at US$839.9m and the decline was more marked at the trading level with a 26.0% drop to US$551.4m.