CEMEX’s First Quarter 2005

CEMEX announced today that its consolidated net sales for the first quarter of 2005 were US$2.6 billion, 43 per cent higher than in the same period of 2004. Consolidated results for first quarter 2005 include one-month results of RMC ending March 31, 2005. Results for first quarter 2004 do not include results of RMC. Excluding the effect of the consolidation of RMC, net sales grew 8% to US$1,956 million. During the quarter, all of our pre-RMC markets experienced increased sales, with the exception of Mexico. 

Consolidated cement and ready mix volumes continue to increase throughout most of our markets, fueled mainly by infrastructure spending and residential building. Our consolidated cement volume increased 5% while consolidated ready-mix volume grew 74% in the first quarter to 16 million metric tons and 9.8 million cubic meters, respectively. Our consolidated aggregates volume increased 130% in first quarter 2005, reaching 19.9 million metric tons. 

Free cash flow for the quarter increased 2% versus the same quarter a year ago, reaching US$296 million. EBITDA (operating income plus depreciation and amortization) grew 14% to US$633 million. Excluding the effect of the consolidation of RMC, EBITDA for the quarter was US$583 million, 5% higher than a year ago. 

Operating income for the quarter was US$440 million, up 12% over the same period of 2004. Excluding the effect of RMC, operating income grew 6% to US$417 million. This improvement resulted primarily from higher domestic cement volumes in most of the markets in our portfolio, despite fewer business days in the quarter. Additionally our results benefited from continuing attractive supply-demand dynamics. 

Hector Medina, Executive Vice President of Planning and Finance, said: "This was a very important quarter for the development of CEMEX. On March 1, we took a significant strategic step by completing the acquisition of RMC. This acquisition, and its integration into CEMEX, will provide us with greater global reach and stronger positions across the value chain, both of which will enable us to compete more effectively and will enhance our financial strength to continue to grow profitably throughout the business cycle". 

Net debt at the end of the quarter was US$10,435 million, 87% higher than that at the end of 2004. The increase in net debt reflects the acquisition of the remaining share capital of RMC- executed in March 2005 - and the assumption of RMC’s debt on the acquisition day. The net-debt-to-EBITDA ratio increased to 3.2 times from 2.2 times at the end of 2004, while interest coverage remained unchanged at 6.8 times versus the previous quarter.