Cemex 1Q Results Seen Benefiting From RMC

Cemex 1Q Results Seen Benefiting From RMC
Published: 19 April 2006

Cemex is expected to post solid earnings growth in the first quarter, helped by last year’s acquisition of the RMC Group and a late Easter holiday, analysts said.   Cemex, the world’s biggest supplier of ready-mix concrete and No 3 cement maker, is expected to post net income of between US$460m and US$510m in the first quarter, according to analysts’ reports. First-quarter net profit was US$444m in 2005. 
 
"This is a very good quarter," said Gonzalo Fernandez, an analyst at Santander Serfin in Mexico City Tuesday. While Cemex will benefit from more working days due to an April Easter and the consolidation of the results of RMC, which was acquired last March, the company is also experiencing strong organic growth, Fernandez said.  "The construction market in Mexico is extremely strong," he said, adding that RMC is also enjoying better-than-expected margins. 
 
Last month, Cemex estimated that it would generate $3.9 billion in revenue in the first quarter, up from $2.6 billion in the year-earlier period. It also predicted a 26 per cent improvement in earnings before interest, taxes, depreciation and amortization, or EBITDA, to US$800m. However, Fernandez called the company’s EBITDA figures "very, very conservative" and predicted the results would be better than that, around US$822m.