South & Central America drive Cemex higher

South & Central America drive Cemex higher
Published: 27 April 2012

Tagged Under: Cemex Mexico 

Cemex’ first quarter turnover was up by 3.5 per cent to US$3502.6m and the EBITDA improved by 6.5 per cent to US$567.3m. The trading profit continued to recover strongly and rose by 33.9 per cent to US$240.4m.

Fernando A Gonzalez, Executive Vice President of Finance and Administration, said, "The favorable performance in most of our regions leads us to believe that we are in the initial stages of a turnaround.

"This is the sixth consecutive quarter of top-line growth in our results. We also saw growth in our consolidated cement volumes during the quarter versus the same quarter last year. Consolidated prices for cement, ready mix, and aggregates also increased on a quarter-on-quarter basis both in local-currency and U.-dollar terms. In fact, all of our regions showed stable to growing prices on a quarter-on-quarter basis in all three products with the exception of our aggregates business in Asia. We are particularly pleased with the quarterly performance of our operations in the United States and the South, Central America and Caribbean region."

The net interest charge increased by 6.9 per cent to US$338.5m and other financial items produced a substantial positive swing leading to a US$63.4m a pre-tax profit, compared with a loss of US$103m a year earlier. The effective net debt was 2.0 per cent lower at US$17,158m, helped by a 58.2 per cent reduction in perpetual notes outstanding to US$490m. Equity shareholders’ funds were reduced by 16 per cent compared with a year earlier so stand at US$12,228.2m to give a gearing level of 149.2 per cent. Some 55 per cent of the debt was at fixed rates, compared with 51 per cent a year earlier and 79 per cent of the debt was denominated in US dollars, 17 per cent in euros and 4 per cent in Mexican pesos. 

Cement shipments in the first quarter were 2.3 per cent ahead at 15.62Mt and ready-mixed concrete deliveries improved by 1.4 per cent to 12.46Mm³, but the aggregates production declined by 4.6 per cent to 33.55Mt. Volumes were ahead in the USA and in South and Central America, but declined in double digits in Europe and in the Near East.

The Mexican turnover eased by 0.5 per cent to US$837.7m but the EBITDA improved by the same percentage to US$296.7m, while the trading profit was off by 0.5 per cent to US$243.8m. Domestic cement deliveries did improve some four per cent, with demand being boosted by good commercial and industrial demand, helped by pre-election spending. Prices improved by two per cent in local currency terms, but declined 5 per cent when measured in US dollars.
 
US turnover reversed the decline seen in recent years with a 35.1 per cent advance to US$684.3m, helped by the initial consolidation of the Ready Mix USA business in addition to an underlying increase in demand during the period. The loss at the EBITDA level, which had more than doubled in the comparative period last year, retracted by 46.9 per cent to US$24.0m, while the trading loss declined by 18.9 per cent to US$148.0m. This was helped by better weather conditions and recovering spending in the commercial and industrial segment and an initial recovery being seen in housebuilding activity. Infrastructure investments, however, remained at a modest level. Cement shipments increased by some 22 per cent, but price levels remained unchanged overall.

In northern Europe, turnover declined by 11.3 per cent to US$872.9m, but the EBITDA jumped by 5.2 times to US$55.2m and the seasonal trading loss was reduced by 88.7 per cent to US$7.39m.  Cement volumes declined by some 14 per cent but the average price, measured in local currencies, did improve by 3 per cent. In Great Britain, cement deliveries affected by lower demand and unfavourable weather conditions and declined by 13 per cent. In Germany, cement deliveries fell by 19 per cent with the weather being less favourable than in the comparable period last year, but housebuilding activity did benefit from increased volumes. Commercial and industrial building activity was also better but infrastructure investments fell as less federal money was being spent. The Polish operations suffered from poor weather, particularly during February, and cement deliveries were off by nine per cent, but the outlook for infrastructure investments remains positive on the back of EU funding.

The Mediterranean region produced a turnover 13.6 per cent lower at US$377.2m and the EBITDA declined by 16.1 per cent to US$97.5m with the trading profit falling by 21.7 per cent to US$67.8m. Grey cement domestic deliveries declined by 16 per cent, while the average local; currency price was off by six per cent. In Spain, domestic grey cement deliveries dropped by 42 per cent. Demand was weak in all markets, with the Aragon and Levante regions being particularly badly hit. Egyptian domestic deliveries were off by just one per cent thanks to an increase in housebuilding activity.

In South America, Central America and the Caribbean, the turnover rose strongly and was 30.1 per cent higher at US$524.5m, which represented a 38 per cent advance on a comparable basis. The EBITDA jumped by 56.3 per cent to US$178.0m and the trading profit shot up by 78.5 per cent to US157.4m. Cementitous volumes were 7 per cent higher and prices improved by an average 14 per cent when measured in local currencies and by 15 per cent in US dollar terms. Aggregates shipments increased by 16 per cent and the average price was up by 12 per cent. Ready-mixed concrete volumes advanced by 14 per cent and prices rose by a fifth when measured in local currencies and by 22 per cent in US dollar terms. In Colombia, the biggest single market, saw cement shipments advance by 9 per cent, supported by increased spending on the infrastructure and good demand from both residential and commercial and industrial building.

The Asian turnover was ahead by 5.4 per cent to US$128.3m, but the EBITDA dropped by 42.5 per cent to US$12.4m and the trading dropped by 63.6 per cent to US$5.3m. Cement shipments were 10 per cent higher, but ready-mixed concrete deliveries fell by 16 per cent and the aggregates volume dropped by 64 per cent. Cement prices were one per cent higher in local currencies and unchanged in dollar terms, while prices for ready-mixed concrete improved by two per cent but aggregates pricing declined by seven per cent. In the Philippines, domestic deliveries rose by 12 per cent as government spending on the infrastructure was given a new impetus.