Cemex: Mexican margins down

Cemex: Mexican margins down
Published: 25 October 2004

For the first nine months of 2004, Cemex increased its operating profit at the EBITDA level by 19.1% to US$1,873.14m, with the trading profit (EBIT) pushing ahead by 25.7% to US$1,376.1m on a turnover 11.3% higher at US$5885.2m. While EBITDA margins declined in Mexico and in Venezuela, they improved in most other markets.  The net debt at the end of September was down by 17.6%, compared with the same time last year, to US$4,679m and the interest cover improved from 5.02 times to 6.72 times.  The USS5,800m acquisition of RMC Group now looks likely to be completed around the turn of the year, but it is yet too early to say whether the deal will go through in time to affect the year end balance sheet.  Cement deliveries by Cemex during the nine months increased by 2.1% to 49.49Mt and the ready-mixed concrete volume advanced by 10.5% to 17.90m m3. 

 In Mexico, domestic cement deliveries rose by around 2%, while a 70% increase in exports during the third quarter left the export volume for the year to date ahead by some 23%. Average grey cement prices were 3% lower in dollar terms and off by 2%, when measured in constant pesos. The effect of weaker prices and an adverse impact of the product mix was partially offset by lower kiln fuel costs, but this did not prevent third quarter EBITDA margins to drop from 46.4% to 42.8%.  For the nine months, the EBITDA improved by 5.1% to US$941.6m, on a turnover 6.8% higher at US$2109.1m.

Ready-mixed concrete deliveries, which were up by 13%, rose much more strongly than cement volumes and this shift away from bagged cement explains some of the negative effects in the product mix. 

 Largely thanks to the weaker dollar, the Spanish operations reported a 10.7% increase in turnover to US$939.0m and a 21.5% rise in EBITDA to US$291.7m.  Cemex España, the market leader in Spain, saw domestic cement deliveries rise by 2%, with ready-mixed concrete deliveries 1% higher. Volumes were helped by a 9% increase in the third quarter when the negative weather effect earlier in the year was compensated for and demand was strong across all sectors.  A 3% increase in the cement price in euros translated into a 12% jump when measured in US dollars, with a marginally higher price increase being achieved in ready-mixed concrete. 
In Egypt, the cement price rose by 30% in US dollar terms, and by 36% in Egyptian pounds, but volumes were weak, with domestic deliveries down by some 6%.  Turnover was 50.9% higher at US$140.8m and the EBITDA advanced by 59.8% to US$66.6m.  In Cemex’ Asian markets, turnover rose by 5.0% to US$150.3m and the EBITDA shot up by 183.5% to US$42.3m, helped by a recovery in Philippine cement prices, which shows through in a 22% increase in the average cement price achieved across the region. Cement deliveries rose in the Philippines and in Thailand, but declined elsewhere, to give an overall reduction.