GCC profits fall 17 per cent on domestic construction slowdown

Mexican cement maker Grupo Cementos de Chihuahua reported a MXP124m(US$11.2m) net profit in the first quarter of 2005, dropping 17.1% from 1Q04, company CEO Manuel Milán said during a conference call.

Cement sales in the US increased 11% in volume during the quarter. Combined with an average 7% price hike, revenue grew 22.7% over the same period to MXP367m 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 dropped 33%, he said. The situation also put downward pressure on cement pricing, and GCC closed the quarter with Mexico revenues of MXP469m, an 18% drop YoY.

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 MXP835m, falling 3.9% from MXP870m in the first quarter of 2004, while Ebitda also slipped 1.7% to MXP270m.