Grupo Cementos de Chihuahua (GCC) net sales in the first quarter of 2006 increased 42.3 per cent to US$1212.4m pesos. This solid growth reflected higher sales in each of the company’s markets. In the United States, net sales rose 32.3 per cent as a result of the rise in average cement prices and 6.7 per cent volume growth, as well as revenues derived from the sale of coal to third parties from the NKC mine, which was acquired in the second quarter of 2005. In addition, the concrete operations of Consolidated Ready Mix (CRM) were integrated this quarter, following their acquisition in January 2006. Revenues from NKC and CRM totaled $28.4m pesos and $31.5m pesos in the quarter, respectively.
In order to meet strong customer demand, GCC continued to supplement its local cement production with imports from its plants in Mexico, as well as with the limited purchase of third-party cement.
In Mexico, the strong 18.8 per cent increase in net sales was primarily due to higher cement and concrete volumes, which rose 17.5 per cent and 34.0 per cent, respectively, as well as higher average cement prices. These gains reflect ongoing construction investment in multiple sectors in Mexico.
In Bolivia, net sales attributable to GCC totaled $150.3m pesos in the first quarter. This reflects the increase in demand for cement, concrete and aggregates from public infrastructure projects such as highway construction, and solid dynamics in the country’s other construction sectors.
On January 3, 2006, GCC acquired the assets of four leading ready-mix concrete companies in eastern South Dakota and western Minnesota in an all-cash transaction. The acquired companies, Consolidated Ready Mix Inc., Henrich & Sons, Inc., Huron Steel Structures, Inc., and B&B Concrete, Inc., generated approximately US$30m in revenue in 2005. The acquired assets include 14 strategically located ready-mix plants and a fleet of 100 ready-mix trucks. The group of companies will operate as "Consolidated Ready Mix, Inc." by its current management as a wholly owned subsidiary of GCC.
The lowering of US cement import tariffs tariffs will mean that GCC will receive approximately US$40m plus interest as reimbursement for previous deposits. In addition, the company will eliminate approximately US$30m in liabilities from its balance sheet and generate approximately US$18m in savings annually as result of the lower tariffs.