GCC profits fall 17 per cent on domestic construction slowdown - Mexico

Mexican cement maker Grupo Cementos de Chihuahua  reported a 124mn-peso
(US$11.2mn) net profit in the first quarter of 2005, dropping 17.1 per cent from 1Q04, company CEO Manuel Milán said during a conference call.

Cement sales in the US increased 11 per cent in volume during the quarter. Combined with an average 7 per cent price hike, revenue grew 22.7 per cent over the same period to 367mn pesos in the US, he said, which "boosted top-line performance."

However, in Mexico there were fewer working days due to the Easter holidays and "we had a high inventory of new homes," which negatively affected construction works and thereby affected cement sales.

Sales volume in concrete blocks alone - a key element to house building in Mexico - dropped 33 per cent, he said. The situation also put downward pressure on cement pricing, and GCC closed the quarter with Mexico revenues of 469m pesos, an 18 per cent drop year-on-year.

GCC expects sales both in Mexico and the US to be in line with 2004 figures, he added, as higher cement prices in the US will offset the construction slowdown as interest rates rise, while in Mexico the company saw construction works beginning to pick up end-March.

Total revenues for the period came to 835m pesos, falling 3.9 per cent from 870mn pesos in the first quarter of 2004, while Ebitda also slipped 1.7 per cent to 270m pesos.