Cemex increased domestic Mexican cement prices on Friday by an average six per cent to offset higher production and power costs, a company executive said. Revenues for Cemex, the top producer in Mexico, are heavily influenced by price increases. Sales in Mexico currently are calculated to represent 20 per cent of total sales which were $4.3bn in the third quarter. Mexican sales had a higher weighting prior to last year’s acquisition of Britain’s ready mix concrete maker RMC for US$5.8bn.
Cemex, with operations in more than 50 nations, announced the price increase to clients on Friday, the executive said. "In the last two years, accumulated inflation has been 8.7 per cent while the price of cement has only increased 3.4 per cent in the same period," the executive told Reuters. "The increase is around six per cent, depending on the region. It is an attempt to compensate for the rise in production costs, among them fuel oil, gas, electricity and gasoline, which have jumped 35.6 per cent in the last two years," he said.
The executive also said cement prices only increased 1.3 percent in 2005. "The increase was less than half inflation in 2005 which came in at 3.3 percent," he said. Cemex had tried to push through a domestic cement price increase averaging five per cent at the start of 2005 but had to make discounts over the year, as demand eased and customers gained some useful competitive discounts, which led to the final lower 1.3 per cent annual hike.